Owners taking over Ritz-Carlton in Palm Beach

On July 1, Britannia Pacific Properties will convert the Ritz-Carlton Palm Beach hotel in Florida to Eau Palm Beach Resort & Spa. The owners have contracted with Preferred Hotel Group to represent the hotel.

Lewis Trust Group, which owns the hotel under the legal arm of RC/PB Inc., last week announced it is suing The Ritz-Carlton Hotel Co., Marriott International, and supplier co-op Avendra Inc., alleging those companies are harming profitability through excessive fee charges and via kickbacks.

Eva Hill, president of Britannia Pacific Properties, which asset manages hotels for the Lewis Trust Group in the United States, told HOTELS Magazine on Monday it has an agreement with Ritz-Carlton to take over management on July 1. She did not offer further details on this deal.

Later on Monday morning, The Ritz-Carlton Hotel Co. came out with a statement saying it would cease managing The Ritz-Carlton Hotel, Palm Beach as of July 1. In connection with its departure, Ritz-Carlton also said that it has filed a multi-million dollar counterclaim against the owner, RC/PB Inc., for breach of contract.

Ritz-Carlton noted that the court in the pending litigation filed by RC/PB permitted the owner to take over the hotel even as it dismissed the vast majority of the owner’s claims, but that the court also stated that such action would subject the owner to breach of contract damages claims. Ritz-Carlton categorically refuted the owner’s claims relative to the management of the hotel, saying that Ritz-Carlton has always passed the performance test in its contract with the owner. In fact, under Ritz-Carlton’s management, the hotel was forecasted to earn millions of dollars in net profit in 2013.

Lewis Trust Group, London, is a family-owned business, which also owns Isrotel Hotels Management in Israel, two other hotels in the U.S. and is developing more hotels in Asia, the U.S. and Israel, according to Hill.

“Becoming an independent hotel with Preferred is the best thing for this property,” Hill said. “There will be a focus on experiential activities and customized services.”

A new Eau Palm Beach Resort & Spa is supposed to go live next week and Hill said more plans for the hotel will be announced in July. She added that the existing staff, including management, have been offered to retain their job with current levels of pay and benefits.

Bob Van Ness, executive vice president of Preferred Hotel Group, told HOTELS that the Palm Beach hotel owner recently reached out to the consortium about representation and struck a deal late last week. He added that this hotel will become the 16th member of Preferred with both the Forbes 5-Star and AAA 5-Diamond ratings.

A Preferred spokesperson said this deal represents its fourth conversion from a hard brand in past three months. “It is not unusual today to see hotels hard flagged for a number of years rethinking that proposition,” Van Ness said. “Whether you call it a soft brand or an independent brand, there is a lot to be said for owners who want to go into that direction.”