Over the years, we’ve seen big hotel companies involved in a variety of lawsuits. For example, there was that time when Abby Lee Miller, from Dance Moms, sued Hilton Hotels for $8.5 million. However, hotel chains have had their own share of starting litigation, such as when Marriott filed a suit against robocalls.
Marriott is once again in the news for filing a lawsuit—this time against a hotel company that owns one of its hotels.
Large hotel brands such as Marriott, Hyatt, IHG, etc., don’t own most of their hotels. Instead they lease the rights to use their hotel brands’ names to franchisees.
To that end, Marriott International is currently suing a New York-based franchisee. They say the franchisee used one of their hotels as a migrant shelter but still used Marriott’s signage and proprietary marks.
The lawsuit
The $2.6 million federal lawsuit accuses Pride Hotel, of Jamaica, Queens, of establishing an agreement with city leaders to host migrants and asylum seekers at their hotel, which had previously been scheduled to become a dual-branded Aloft and Element hotel in Queens, one of the boroughs of New York City. This “lucrative” partnership initiated “just months before” the hotel’s November 2023 opening allegedly violated its franchise agreement with Marriott.
The property, an 18-story hotel with 283 units, is located near John F. Kennedy International Airport. Marriott claims that Pride House’s actions broke the agreement between the two companies and gave up their right to use Marriott branding, even after eight years of planning and construction.
Artist’s rendering
Marriott says it received a letter from Pride Hotel’s attorney saying it wasn’t “economically feasible” for the hotels to open by its November 2023 deadline (*cough* After 8 years *cough*). They claimed this was due to “the poor state of the economy and continued slowdown in the hospitality industry.” That letter allegedly also contained a proposal to use the site for migrant housing.
It was already labeled a Marriott property
Artist’s rendering
Marriott claims it offered the hotel a “compromise agreement” to use the site as migrant housing. However they say that Pride Hotel didn’t respond to this agreement, “despite Marriott’s numerous attempts to engage” with them. Meanwhile, undocumented immigrants were already living in the hotel, which was already well-identified with the Marriott brand.
“At all relevant times, and despite this impermissible Alternative Use of the Hotels, Pride Hotel failed or refused to deidentify the Hotels by removing Marriott-branded signage, proprietary marks, and trade dress,” the complaint reads.
According to the lawsuit, “…in addition to its actual damages (including lost fees for the balance of the contractual term), its right to liquidated damages, and damage to Marriott’s goodwill and reputation, Marriott has suffered a significant loss of opportunity in a competitive and desirable market.”
Marriott Int’l claims that Pride Hotel’s actions have led to “significant harm” to Marriott in a competitive hotel market such as JFK. Marriott says it would be difficult for it to reenter the area surrounding JFK, since it’s “already saturated with existing hotels.”
This breach of contract, it claims, amounts to $2,603,708 in damages.
I guess we’ll see what happens.
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