Shane Nelson
Shane Nelson

InsightIn a 55-page complaint that at times reads like the screenplay for a Hollywood thriller, a subsidiary of Marriott International has filed a federal lawsuit against Aqua Hotels & Resorts, claiming that the Honolulu-based hotel management firm secretly met with the owner of the former Waikiki Edition to orchestrate an early morning “sneak attack” takeover at the 353-room luxury property on Aug. 28.

Filed Dec. 12 by Marriott Hotel Services in Honolulu’s U.S. District Court, the lawsuit accuses Aqua of unethically depriving Marriott of benefits agreed to in a 30-year, $65 million contract with the hotel’s owner, San Diego-based M Waikiki LLC.

It also alleges that the hotel operator, looking to capitalize on a dispute between the owners and Marriott, first met with M Waikiki as early as June and offered to run the Waikiki Edition for a below-market-norm base management fee of 2% of gross revenues, or half of the 4% ownership had agreed to with Marriott.

“We are not surprised by this action,” Aqua President and CEO Benjamin Rafter said in a statement emailed to Travel Weekly Dec. 14. “In May of this year, the owner of the hotel property filed a lawsuit against Marriott for gross mismanagement and failure to develop as promised the Edition brand with which the hotel was previously affiliated.

“The action is without merit,” Rafter said of Marriott’s suit. “And our legal team will be further reviewing the lawsuit to determine the appropriate course of action.”

Marriott claims that Aqua worked directly with the Waikiki Edition’s head of security to coordinate the “forceful and hostile” takeover at the property and hired a computer consultant “to crack Marriott’s passwords and access the hotel’s computers once on property.”

“They also ransacked Marriott's paper files, seeking competitively sensitive information about Marriott guests and potential sales leads that they wished to exploit and convert to Aqua,” lawyers for Marriott said in the complaint.

M Waikiki filed for Chapter 11 bankruptcy protection Aug. 30, thwarting attempts by Marriott to retake control of the property through the courts immediately following the takeover. Renamed the Modern Honolulu, the luxury boutique property is now one of 18 hotels across Hawaii managed by Aqua.

Michael Paulin, Aqua’s current chairman, founded the company in 2001. In its Dec. 12 complaint, Marriott’s lawyers also noted that one of M Waikiki’s 70 ownership entities is Paulin Investment Properties LLC, of which Paulin is a member.

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