Nikki Beach Hotels & Resorts, which terminated its agreement to operate a condo-hotel on Panama’s Pacific coast, has sued the property owner for alleged unauthorized use of the Nikki Beach brand after Nikki Beach pulled out.
Nikki Beach is seeking an injunction restraining the resort owner from using the Nikki Beach brand to advertise or take bookings.
According to letters included in the Feb. 10 complaint document, Nikki Beach terminated its agreement on Nov. 22, claiming that the hotel in Playa Blanca did not address "an extensive list of construction defects."
In a Nov. 29 letter to hotel owner Casa de Campo Farallon, Nikki Beach said, "It has been now brought to our attention that Casa de Campo Farallon is using the name 'Nikki Beach' to book hotel rooms through its website."
In the complaint, filed in U.S. District Court in Miami, Nikki Beach claimed that Farallon as of February 2011 "continues to promote and solicit room reservations and other resort-related business for the resort using the Nikki Beach marks … without the consent or authorization of Nikki Beach."
The resort opened in late December, according to the complaint.
In a press release issued by the hotel owner, it claimed that the hotel has a contractual right to operate the property under the Nikki Beach brand. However, the owner is searching for another brand to operate the resort.
"Nikki Beach is seeking improper termination of contract without any legitimate grounds," said Juan Rodriguez, partner at Carey Rodriguez Greenberg & Paul. "They have simply walked away from their commitments in Panama, which is a grave disappointment for a company that holds itself out as a luxury hotel operator."
Nikki Beach said it terminated the management deal because the hotel fell short of Nikki Beach's brand standards.
In an Oct. 13 letter to the hotel owner, Nikki Beach provided a long list of alleged problems, including inadequate waterproofing, office space and staff areas. Nikki Beach also said the property had no spa and no private cabanas for the beach club.
Nikki Beach notified Farallon that it would terminate the management agreement if the owner did not rectify the problems within 30 days. According to Nikki Beach, Farallon did not.
"As a global five-star brand, we set certain standards for the design, construction and operation of our properties," Peter Higney, Nikki Beach’s director of operations, said in a statement. "We have a responsibility to maintain our brand standards and under no circumstances would we allow the developer to use our brand and misrepresent us to our loyal Nikki Beach customers."