Greens seek to oust Fairmont from Princess
The wealthy Green family is aiming to ditch the Fairmont group as managers of the Hamilton Princess, The Royal Gazette can reveal.
Now the row has moved to a New York court as the Greens seek to dump the hotel chain, which also owns and operates the Fairmont Southampton.
The battle broke out earlier this year after the Greens wrote to Fairmont to cancel the agreement, which was inherited when the family bought the hotel in 2012.
The letter listed a catalogue of complaints — including an allegation that Fairmont had favoured its Southampton property over the Princess.
But lawyers for Fairmont have denied the claims.
And yesterday an arbitrator was appointed by the US District Court, Southern District of New York, to rule on the row.
A source familiar with the case said: “We’re looking to have this claim arbitrated within the next 120 days.
“The owner is seeking to terminate the management agreement and appoint someone else.
“They feel there are some important conflicts in that they own the one hotel and this one they are just managing and they are very different hotels.
“The owners of the Hamilton property have also made a tremendous investment in capital improvements in the last year and are looking for the highest type of operation.”
The letter from Hamilton Properties Ltd, the Greens’ company, to the Fairmont Group cites “failure to operate the hotel and all of its facilities and activities consistent with the standard with the standard of conduct required”.
It added: “Operator has failed to maintain the physical and operational standards applicable to the full service luxury hotels comparable to the hotel ...”
And it said: “The sales and marketing programmes have failed to meet the standard, spending has been above market and owner has not achieved a reasonable return on its investment.
“Moreover, operator has failed to provide sufficient information and analyses to substantiate any return on the substantial spend by owner for sales and marketing activities and in particular from the corporate sales and marketing office.”
The April letter, which gave ten days’ notice of termination, alleged that Fairmont had “failed for a significant period to maintain rate parity across third party websites and allowed publication of rates that were sometimes lower than those shown on the Fairmont websites, which has resulted in rates that are below market for the hotel, below market in relation to operator’s other property on Bermuda and below market rates during peak season.
“These issues have been repeatedly raised with operator over a an extended period and have not been remedied.
“In fact, such information has been utilised by operator to advantage its other property on Bermuda to the detriment of the hotel, which is also a breach of confidentiality provision ... of the hotel of the hotel management agreement.”
And the letter said: “When the topic of room rates at the hotel has been addressed, operator has utilised such discussions to similarly address rates at the Southampton Princess to the benefit of that competing hotel owned by operator and to the detriment of the Hamilton Princess.”
The letter added: “There has been an excessive turnover in the executive staff including the financial controller, sales and marketing director, revenue management, human resources director and the executive chef.
“These problems have been compounded by the operator’s general lack of cooperation and the obstructive behaviour, which prevented correcting these well-documented deficiencies.”
And the letter said that a lack of staff training meant that the hotel was below the required standard, which had “a detrimental impact on revenue production and guest satisfaction at the hotel”.
It added: “Given that the regional training manager for Bermuda is located at the Southampton Princess, the owner expected far more interaction by the operator to ensure improvement in service and quality.”
And the termination letter said there had been “failure to address problems raised in JD Power surveys in which the hotel was consistently ranked in the bottom quartile among other North American Fairmont hotels.”
And it also cited “lack of oversight regarding the property’s maintenance and cleanliness”.
But Fairmont, in documents lodged with the New York court, denied the claims.
Their lawyers said: “Pursuant to the agreements, operator and advisor have been providing owner with the considerable benefit of their expertise in connection with the day-to-day operation and management of the hotel and the use of their proprietary materials, such as trademarks, software applications, operational manuals, corporate records, surveys and business and marketing plans.”
They added: “Operator and advisor vigorously dispute that there has been any material default, dispute that any such defaults are not curable and dispute that the owner has the present right to terminate the agreements, let alone on ten days’ notice.”
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