Update on Starwood Vs. Le Parker Meridien & Parker Palm Springs Law Suit

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Yesterday, I wrote about an article on NY Post regarding alleged fabrication of records by both Le Parker Meridien New York and Parker Palm Spring in order to get greater reimbursements from Starwood’s loyalty arm for award nights consumed at these two properties.

spg-vs-parker

Friend gave me a hint to download the actual suit, which I did. It is a nice read about the ins and outs of the alleged misrepresentation that had been going on.

Here’s what had been going on according to Starwood:

The reimbursement rate from Starwood for award nights is dependent of the occupancy rate of the night. When the occupancy rate is below 95%, the hotel gets a set monetary reimbursement that is relatively low.

When the occupancy rate is 95% or higher, the property receives the ADR (average daily rate) for the consumed award rooms. In case of Le Parker Meridien, the reimbursement under the ADR is $200 or more higher than the base reimbursement.

The hotel had falsified records, when it was close to the 95% occupancy rate, in order to get the higher ADR reimbursement rate from SPG.

The suit alleges that both properties had made reservations under fictitious names and faked their check ins to the hotel to get the higher occupancy rate.

The New York property had done this mainly by booking FAM (free travel agent familiarization trips) trips. According to the law suit, they had booked hundreds of of these trips to manipulate the occupancy rate. They had also checked in guests, who had reservations for the night, but never showed up.

It seems that when hotel hits the 95% occupancy rate, they need to produce a ADR document for the Starwood and fax it to the SPG’s office in Ontario (Canada) for processing purposes.

Apparently, there was quite a few employees aware of this falsifications as they had to carry it through by producing these documents. According to the law suit, they were instructed not to discuss it over the email.

Why going public?

It is rather interesting that Starwood didn’t just quietly purge these properties out of their portfolio, but rather launched a law suit that is public.

Maybe they are doing it this way to signal possible other properties, what might happen, if they get caught in similar practices.

Conclusion

Dirty laundry in public? What could be better? I am just waiting for these Parker properties to launch a counter suite.

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