by Michael J. Shapiro | November 05, 2014
Owners of the former Capella Pedregal, a 66-room boutique luxury resort in Los Cabos, Mexico, have ended their affiliation with the Capella brand and terminated Capella's management services. The hotel currently is closed and undergoing reconstruction following the damage wrought by Hurricane Odile in September.

According to the Capella Hotel Group, representatives of CarVal Investors, a co-owner of the property, arrived at the resort early Monday evening and informed the management team they were taking over the property, without prior notice. "Without any official notification or show-of-cause letter from the representatives of CarVal Investors, we were informed that CHG management was being instructed to leave the property," said Capella Hotel Group chairman and CEO Horst Schulze in a statement. "This despite Capella Pedregal achieving record-breaking occupancy rates and revenue in the last two years. We believe whatever allegations they have are baseless and we intend to promptly seek judicial recognition of our contractual rights."

A spokesperson for CarVal Investors was unable to specify what those allegations are, due to the pending litigation. According to a statement from the hotel owners, the property has been renamed The Resort at Pedregal. "This iconic five-diamond hotel will continue to offer luxurious accommodations to its guests and a superior resort experience in Mexico," reads the statement.

"Capella Hotel Group has a valid and binding contract with Hoteles del Cabo [the principal owner], and CarVal has violated this agreement without reason in a highly unprofessional manner," continued Capella chairman and CEO Schulze. "Our performance for the property is unquestioned and we have no intention to accept a takeover of property operations. This action by CarVal is part of an ongoing dispute between the two owners of the asset and does not reflect on the operation/management of the property by CHG - which by all measures has been highly successful, despite this very difficult situation and a challenging economic environment. It is unfortunate that we have been caught in the middle."

The resort owners have named industry veteran Bob Holland as The Resort at Pedregal's interim general manager, and they intend to reopen the property in early 2015. The management change will have "little to no impact" on the rest of the property's staff, noted the owners in a press release. Holland most recently served as general manager of the Wyndham Grand Chicago Riverfront, and he has held executive positions with Wyndham and Interstate Hotels & Resorts.