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Hyatt Corporation vs Monopoly Hotels Group

Hyatt fails mediation in $500 million damages claim

Nov 12, 2010

ATLANTA - Hyatt Corporation failed their requested mediation with Monopoly Hotels Group recently held in Atlanta at the end of October.

Monopoly Hotel Group, LLC d/b/a Hawthorn Hotels & Suites Brand Management, (a Hawthorn International Master Licensee from 2002, for 13 countries), is awaiting a final judgment regarding a trial court decision allowing Hyatt Corporation to require arbitration of this dispute with the International Chamber of Commerce. Previously, the trial court ruled that Monopoly asserted valid claims against Hyatt Corporation for breach of contract, breach of fiduciary duty, and fraud, among others.

Monopoly estimates its damages to be in excess of $500,000,000.00, and seeks the imposition of punitive damages against Hyatt Corporation for intentionally tortious conduct.

The case is pending in the Superior Court of Gwinnett County, State of Georgia, (Action File No. 08-A-05255-4), and in addition to Hyatt Hotels Corporation and Global Hyatt Corporation, Monopoly asserts claims against U.S. Franchise Systems, Inc. (the immediate parent company of the franchisor of the Hawthorn Suites Brand) and Roy E. Flora (an officer of USFSI) whom were also represented in the failed mediation, and whom Monopoly will now proceed immediately against separately from its case against Hyatt. Flora's deposition was taken on the 28th of October. Further Hyatt & USFS Executives will be examined in the months to come.

Monopoly's claims are based on its March 1, 2002 Master License Agreement with Hawthorn International, Inc. (the "MLA"), regarding the establishment and operation of hotels to operate under the name of "HAWTHORN HOTELS AND SUITES," ultimately covering 13 countries. The MLA was for a 99-year term, and was negotiated and agreed by Mike Leven, U.S. Franchise Systems, Inc.'s founder and Chairman -- now the current CEO of Sands Las Vegas Corp.

Monopoly alleges that beginning in 2005, after Hyatt Corporation acquired, owned, and directed the management of U.S. Franchise Systems, Inc.; it wrongfully thwarted Monopoly's efforts to develop four- and five-star hotels in its licensed territory. Hawthorn and U.S. Franchise Systems, Inc. (although one of the fastest growing hotel franchise systems in the world) was not a hotel operator. Instead, Hawthorn and U.S. Franchise Systems, Inc. operated as a franchise sales system, focusing on rapid franchise growth momentum, and provided extremely limited support and input to Master Licensees.

After Hyatt Corporation acquired U.S. Franchise Systems, Inc., rather than support Monopoly's efforts to develop hotels in its MLA territory, Monopoly alleges Hyatt nefariously directed Hawthorn and U.S. Franchise Systems, Inc. to interfere and hinder further development by Monopoly in its licensed territory. In doing so, Hyatt Corporation was protecting its own "global vision," as it already had a number of established hotels operating in Monopoly's territory, with more in development. Monopoly asserts that Hyatt Corporation viewed Monopoly as a direct competitor, as Monopoly had lucrative contracts for branding and management services of world-class hotel developments close to Hyatt's existing and prospective properties. In 2008, Hyatt Corporation sold U.S. Franchise Systems, Inc. to Wyndham Worldwide.

Monopoly initiated litigation against Hyatt Corporation, U.S. Franchise Systems, Inc. and Roy E. Flora in June 2008, and despite the case pending for over two years, it remains optimistic for a favorable outcome since its claims were validated by Superior Court Judge Clark's decision on March 24, 2010.

Hyatt fails mediation in $500 million damages claim
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