Tag Archives: Starwood Hotels and Resorts

Hilton vs. Starwood. Death of Denizen?

terra_cotta_soldiersFair and honest competitive behavior or something else?  Hilton Hotels President & CEO Christopher Nassetta has a legal and ethical leadership challenge at hand to be sure.  It used to be said the most feared words in business were “I’m Mike Wallace from 60 Minutes”.  Nowadays its likely the attention of Federal prosecutors.  According to news reports the Hilton Hotels Corp has received a federal grand jury subpoena from the U.S. Attorney’s Office for the Southern District of New York for documents related to allegations that the company and two executives stole documents from rival Starwood Hotels & Resorts to develop Hilton’s luxury brand, Denizen Hotels.  Hilton Hotels has reportedly decided to temporarily suspend development of its Denizen brand and has placed Hilton executives Ross Klein and Amar Lalvani on paid leave.

Hilton Hotels Corporation founded by Conrad Hilton who bought his first hotel in 1919 has enjoyed a reputation for quality, value, integrity and strength that will surely be tested by the ongoing federal investigation into what the New York Times has called a case of corporate espionage.  With more than 3,200 hotels and 525,000 rooms in 77 countries and 135,000 employees worldwide, Hilton Hotels is one of the most recognized brands on the planet.  How much damage will be done to the brand, Hilton Hotels ethical reputation and their plans for the new Denizen Hotels as a result of the federal grand jury investigation and legal proceedings?  Depending on the outcome, that could become the million (or perhaps billion) dollar question.

State of Play. Starwood Sues Hilton.

Beach_ResortsBehind the calm, oasis like environments and splendorous guest services of the luxury hotel industry lies an intensely competitive business.  The global downturn in the economy and anti-travel sentiments expressed by Congress have already driven down room rates and revenues for hotel companies.  And it’s about to get a bit uglier.  Starwood Hotels and Resorts lawsuit against rival Hilton Hotel Corporation for allegedly using stolen Starwood documents makes that abundantly clear.  Starwood claims two former executives Ross Klein and Amar Laivani for its luxury brand group which includes the “W” hotel concept off-loaded over 100,000 confidential competitive documents via e-mail and in direct shipments to their homes and to Hilton Corporation prior to their move to new posts at Hilton Corporation last year.   On March 10th, Hilton announced the launch of its newest luxury brand concept Denizen Hotels a likely competitor to “W” Hotels and other high end concept hotel brands.  In their complaint, Starwood is seeking the destruction of all documents, information and materials related to the roll-out of  of the Denizen hotel brand.  Some have suggested should Starwood’s desired remedy be granted, it would severely damage the Denizen brand at best or cause Hilton to abandon it altogether in the worst case scenario.  Now where were we?  Oh, right—talking about protecting your organization’s intellectual property and those critical cyber assets.