If you went to sleep in a Ritz-Carlton hotel in New York,
Washington, Houston or Aspen, Colo., on the night of Aug. 2, you
might have received an extra jolt with your morning coffee: a note
under your door with the news that you no longer were staying at a
No, this was not a Grade B movie but a bitter dispute turned
ugly, pitting a Saudi sheikh against one of the world's best-known
names and unfolding both in and outside the courtroom. Claiming it
had its reputation to protect, Ritz-Carlton's management teams
conducted the midnight raids to strip the four hotels of their
name, flags and management teams.
Earlier, the Los Angeles investment company Al Anwa USA,
controlled by Abdul Aziz bin Ibrahim al-lbrahim, sued Ritz-Carlton
for about $200 million, accusing the chain of inflating occupancy
levels to gain higher management fees and of squandering its money
-- including $100,000 on a rooftop fete in Washington -- on lavish
parties. Ritz-Carlton had filed a breach-of-contract suit accusing
the firm of not paying $4 million in management fees and of
refusing to attend to such matters as leaky ceilings.
The sheikh said the chain staged the raid on the hotel "to cause
the greatest possible disruption at the four hotels and to gain
some tactical advantage in the original litigation. Indeed,
Ritz-Carlton began taking these steps under cover of darkness on a
Saturday, without notice and without adequate preparation for a
transition of operations." Ritz left the four hotels without a name
and assigned a manager to assist guests. Its action was designed to
force a settlement between two parties that clearly had had enough
of each other.
Chains occasionally threaten to cut loose wayward properties,
but rarely does a spat roll over to the guests rooms. Usually, one
party or another elects not to renew a contract.
We tend to forget that, with the exception of a handful of
chains, almost every hotel that is built today is owned by one
party and managed by another. That dramatic abandonments are almost
unheard of is the wonder here.