The owner of the Edition Waikiki terminated its management contract with Marriott International and renamed the hotel the Modern Honolulu, an action that occurred in the wee hours of Sunday morning, Marriott said.
Aqua Hotels & Resorts is the new management company of the 353-room hotel. The hotel owner said Aqua plans to “offer employment to current hotel staff members, who will maintain their current rate of pay, original start date and accrued vacation.”
In a statement, Marriott called its ouster a “blatant” contract violation.
“This is a deeply unfortunate, regrettable and illegal event,” said Marriott President Arne Sorenson. “The owner and its partners raided the hotel literally under cover of night, forcibly taking over the property and threatening our employees with dismissal unless they immediately agreed to a change of management. We will aggressively and vigorously pursue all remedies against the owner and its partners in this illegal act.”
Marriott demanded that Aqua “vacate the hotel and return control to Marriott.”
“Marriott will also seek substantial damages from the hotel’s owner and its partners for their conduct in damaging the operation and reputation of the hotel, Marriott and the Edition brand,” Marriott said.
The property opened last October as the first Edition, a lifestyle brand launched by Marriott and boutique hotelier Ian Schrager.
The hotel’s owner, M Waikiki LLC of San Diego, was displeased about the hotel’s alleged low occupancy and sued Marriott and Schrager in May.
In the lawsuit, M Waikiki alleged that the hotel was performing poorly because Marriott and Schrager “failed to deliver on a promise to create a chain.”
M Waikiki alleged that when it signed the Edition deal in 2007, Marriott and Schrager said they had “agreements in place to open nine hotels in major cities worldwide within a year.”
In addition, M Waikiki accused Schrager of not living up to a promise to be personally involved in the design of the Edition Waikiki. The hotel owner also said Marriott failed to effectively promote the hotel prior to its opening.
In a news release issued Sunday, M Waikiki said the hotel’s operating loss was $1.9 million from May through July 2011, and that the hotel is expected to lose up to $6.4 million for the year.
In May, both Marriott and Schrager said they would fight the lawsuit. Schrager called it “frivolous.”
On Monday, Marriott reiterated its commitment to the Edition brand. Marriott said it was “actively pursuing development projects for the Edition brand in Chicago, Los Angeles, New York, Washington, Mexico City and Bangkok.” In April, an Edition hotel opened in Istanbul.
When Schrager and Marriott announced their partnership in February 2008, they said they had nine development deals. That was before the real estate market crumbled in fall 2008.