Years of speculation over the sluggish growth pace of Edition Hotels has come to a head with the owner of Edition Waikiki claiming in a lawsuit that Marriott International and partner Ian Schrager haven’t put enough resources toward the brand.
It’s a justifiable accusation for a brand that promised flashy design and fast growth, yet in four years has opened two hotels. Marriott has some real questions to answer, and this lawsuit may force them to open up.
With the lawsuit, M Waikiki, the owner of the 353-room oceanfront hotel, is seeking to remove Marriott from management.
“We believe that promises made in connection with the launch of Edition were broken, leaving our client with significant damages which have been further compounded by Marriott's inability to effectively manage this property,” William A. Brewer III, partner at Bickel & Brewer and lead counsel for M Waikiki, said in a statement to HotelNewsNow.com.
Certainly the timing of the announcement that Marriott and Ian Schrager would partner for a lifestyle brand—at the 2008 ALIS conference in Beverly Hills, California—put both parties behind the 8 ball from the get-go. The economy was about to take a dive, and the hotel industry’s bubble would burst soon after. For comparison, longtime hotel veteran John Russell announced a new brand at the same show, and NYLO was only able to get three properties open amidst a financer’s bankruptcy.
But the availability of financial resources aside, it seems both Marriott and Ian Schrager slowly moved Edition to the proverbial backburner.
In the lawsuit filing, M Waikiki claims Marriott “bragged” that Edition Hotels had agreements in place to open nine hotels worldwide. “They proclaimed that they would have more than 100 hotels in the foreseeable future,” the lawsuit reads.
Marriott certainly was bragging about Edition at the time, as any hotel company would when introducing a new product to the market. But as the hotel industry took a turn for the worst and owners could no longer find attractive lending terms, Marriott shifted its focus elsewhere. Now, with no brand clout to drive customers, the Waikiki hotel is struggling with poor performance.
In speaking with Marriott executives numerous times since the brand launch, it seemed the “talking points” shifted more toward the growth of Marriott’s Autograph Collection. Edition would require financial investment from owners while Autograph would only require buy-in from independent hotels looking to become part of a powerful sales and distribution platform.
Sure, growing Edition from the ground up would require tapping into unconventional resources—maybe even some equity assistance from the parent company—but it appeared as if Marriott was more content with growing the brand at a slow pace and riding out the downturn.
“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.”
A Marriott spokeswoman said there are “about five (Edition Hotels) that are in advanced stages of development, including South Beach and London.”
As far as Schrager’s responsibility in the case, it is unclear how much the creator of the boutique hotelier promised from the beginning. In the lawsuit, M Waikiki says “Schrager promised Owner that his personal involvement, including his attendance at key design meetings, would ensure that the hotel had all the elements of style necessary for the success of the hotel, and for which Schrager had become known.”
Beyond just being there and lending his iconic name to the project, it doesn’t appear that Schrager intended on having much to do with the growth of the brand from the beginning. It was, however, quite shocking in December when Schrager announced he would launch his own new brand, which would undoubtedly compete with Edition. It felt as if his work wasn’t done with one project yet he was moving on to another.
“The Marriott guys are the best and brightest,” Schrager told HotelNewsNows.com in December when asked about his continuing role with the Edition brand. “It’s the only franchisor run by operators, not by financial people. My role will be the same in the future as it was in the past.”
In December, Schrager said he was not concerned with his new brands competing with Edition. They would be a step above and a step below in what Edition has to offer, he said.
“Even if that weren’t the case, I’ve had hotels that were two blocks from each other and didn’t cannibalize from each other,” he said. “People gravitate for different reasons.”
Schrager last week named the first of his two new brands—Public. The announcement drummed up significant buzz throughout the industry, just as Edition did four years ago. Certainly it at least lit a fire under the owner of Edition Waikiki to move forward with the aforementioned lawsuit. Let’s hope Schrager is fully committed to this pet project and it isn’t abandoned to drift away in the surf like Edition.