HONOLULU—Marriott International has lost its first Edition hotel.
M Waikiki LLC, the owner of the 353-room hotel in Waikiki, said it has selected an affiliate of Aqua Hotels & Resorts to manage the property. Also, the hotel has been renamed Modern Honolulu.
Marriott’s ouster comes amid allegations the company mismanaged the hotel and failed to fully develop the Edition brand. A Marriott spokeswoman did not immediately return a call for comment before deadline this morning.
“We are extremely excited about this new opportunity,” Damian McKinney, principal of M Waikiki, said in a statement. “We believe that Aqua will realize the vision on which this hotel was developed—becoming the leading lifestyle hotel in Hawaii.”
Marriott COO Arne Sorenson emailed a statement to The Wall Street Journal, saying: "This is a deeply unfortunate, regrettable and illegal event. 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, which was completely and blatantly in violation of Marriott's contractual agreements."
M Waikiki filed a lawsuit against Marriott and boutique hotelier Ian Schrager more than three months ago, alleging the hotel has suffered from poor performance since opening its doors as the first Edition property late in 2010. Schrager did not return a call for comment before deadline.
During the three-month period from May to July 2011, the owners reported the hotel saw operating losses of US$1.9 million and total projected operating losses at the hotel this year are forecast at nearly US$6.4 million. The hotel’s revenue-per-available-room index, the owners claim, is 47% year-to-date, and occupancy rates in July are almost 20% below its competitive set, with a RevPAR index of 54%.
“Marriott agreed to operate the hotel as a manager. Under the law, the owner is able to terminate the relationship at any time, for cause or otherwise,” lead counsel for the owner, William Brewer, said in an emailed statement. “We exercised our right to assume control of the property to protect our investment.”
There is one other Edition property open in Istanbul and five Editions in development, according to Marriott.
“We are surprised and perplexed by this action and will defend it vigorously,” Marriott told HotelNewsNow.com in a statement after the lawsuit was filed. “Across the spectrum, Edition has been one of the most positively received new lifestyle hotel brands of the 21st century. Innumerable stories in major global media and customer reviews speak for themselves. Edition and specifically the Waikiki Edition have generated tremendous excitement, and both we and Ian Schrager are confident of the hotel’s and Edition's success.”