Sunday, June 19, 2011

The Controversy: Waikiki Edition Owner Sues Marriott

The Waikiki Edition has had its share of issues in the current economic climate. One aspect of the hotel's struggle was reported in a USA Today article published in May and based on a Wall Street Journal feature. Click HERE for the 27-page lawsuit or HERE for the complete article. Below are excerpts.

The owners of Marriott's stylish Waikiki Edition hotel are suing the company and its creative partner, Ian Schrager. The hotel owners say Marriott and Schrager didn't do enough to make the hotel the success that had been promised.

"The abysmal performance of the hotel is attributable in large part to the failed Edition brand and concept," the suit charges.

Marriott responded forcefully: "We are surprised and perplexed by this action and will defend it vigorously."

When the Waikiki Edition opened last October, the owners had expected that they would ride the momentum of other Edition Hotels that had had previously opened -- but their hotel turned out to be the first.

The ownership group -- M Waikiki -- charges that "Marriott lost nearly $3.9 million of owners' money in a mere three months of operation," in part due to cheaper-than-expected room rates.

During the hotel's first three months, the Waikiki Edition filled just $29.5% of rooms at an average rate of $220, providing revenue per available room of $54, the suit says.

That's in stark contrast to a previous forecast that the owners said Marriott had given them. An earlier forecst called for $6.5 million in revenue, 62% occupancy and an average daily rate of $319, providing a revenue per available room of $198 according to the suit.

For example, the suit says, the hotel's splashy, celebrity-riddle opening party last October cost $472,000 -- far exceeding the $150,000 budget.

This post is one in a series in review of the Waikiki Edition. Click HERE to view the entire series of posts.


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