share
by Cheryl-Anne Sturken | October 17, 2012

Eden Roc Renaissance Miami BeachThe series of events unfolding this week at Miami Beach's iconic Eden Roc Renaissance Hotel had all the underpinnings of a bold new HBO drama complete with a hostile takeover attempt in the wee morning hours, police called to the scene and a court-mandated temporary restraining order. In the aftermath, lawsuits and countersuits are being flung between the hotel's owners, Eden Roc LLP, which attempted the takeover, and its management, Renaissance Hotels & Resorts (under Marriott International), as the two companies duke it out for control of the 631-room grande dame, which has been a fixture on the city's hotel landscape since 1956.

This past Sunday, Oct. 14, at around 1:30 a.m., close to 60 people, including uniformed security officers under the guidance of the hotel's owners, attempted to oust Renaissance's management from the hotel's premises and take over operations (the move even included new signage deleting the name Renaissance). Responding to complaints, police arrived on the scene and told the takeover group that since they did not have a court order of eviction, they would have to leave the property. It was a legal win for Renaissance, whose management contract extends through 2030. In a lawsuit filed in New York Supreme Court by Marriott International later that same day, the company stated that "While Eden Roc's initial hostile takeover attempt was unsuccessful due in part to timely police intervention, Eden Roc has threatened to try again and may do so at any moment if the requested relief is not granted." To support Marriott's claim for protection, court papers included an e-mail from outside counsel for Eden Roc to counsel for Renaissance/Marriott stating the latter had "no reason to remain in the hotel property as a squatter/trespasser and our client does intend for remove you."

Over the past several years, the number of lawsuits brought by hotel owners seeking to oust management has increased. This latest high-profile dispute, which actually has been playing out for months, only underscores how contentious some of these partnerships have become, even as the hotel industry continues on its course to financial recovery. Unlike a decade ago, owners are holding management to tighter and tighter operating margins while demanding increased revenue, especially when heavy capital injections have been made to secure a hotel's status, such as a recently wrapped-up $230 million expansion and renovation project at the Eden Roc, which included the addition of 282 rooms and a 22,000-square foot luxury spa.

On Monday, Oct. 15, just hours after its attempted takeover, Eden Roc's owners issued a press release announcing the hotel had been rebranded the Eden Roc Beach Resort & Spa and had a new, seasoned management team in place. In explaining the change, the announcement read, "Under Marriott's management Eden Roc lost market share despite its exceptional amenities and legendary reputation. Our exhaustive efforts to encourage Marriott to correct its numerous management defaults, and to preserve our partnership, proved fruitless, leaving us with no option but to regain control and to put this property on the path to success." On Tuesday, following the court's ruling granting Marriott  International a temporary restraining order, the company issued a terse, two-sentence statement that said Renaissance would continue to manage the property, and that "While Eden Roc disagrees with the Court's order, it will abide
by it pending further court order."

This is not the first time Marriott International has been subject to a forcible nighttime raid by angry hotel owners seeking to regain operational control of their physical property. In August 2011, a similar scenario played out at the former Waikiki Edition hotel in Hawaii, when owners swooped in and overnight rebranded the 353-room hotel The Modern Honolulu, claiming gross mismanagement. That raid resulted in a mudslinging lawsuit that was settled in July of this year for an undisclosed amount.

While these lawsuits largely take place behind the scenes, a world away from the guest experience, they can still pose a disruption. Before inking a contract, meeting planners would do well to question if the management of the hotel of their choice is embroiled in any contentious owner/management disputes.