ST. LOUIS The Ritz-Carlton Hotel Co. has filed a lawsuit against the owner of The Ritz-Carlton, St. Louis, after the owner threatened to terminate its management contract over a financial dispute.
In a civil suit filed in St. Louis County Circuit Court, Ritz-Carlton seeks to prevent Maritz, Wolff & Co. from ending the management deal early.
The dispute stems from conflicting interpretations of the management contract. Maritz claims that Ritz-Carlton owes compensation due to a clause that guarantees the hotel a minimum annual operating profit ofUS$4 million “for any two consecutive fiscal years,” according to a StLouisToday.com report. The minimum profit was not attained in 2008 or 2009, and Ritz-Carlton paid Maritz about US$2 million to make up the shortfall.
However, Martiz anticipates falling short of the guarantee again this year, but Ritz-Carlton says it will not pay because the target only applies to a “new” two-year period, meaning a shortfall payment would not be eligible again until 2011.
Despite previously threatening to cancel the management deal, Maritz cofounder Lew Wolff tells StLouisToday.com that a termination is not imminent. “My sense is that it will get worked out,” he says.
In the lawsuit, Ritz-Carlton asks the court to bar a deal termination before the payment dispute is resolved. A Ritz-Carlton spokesperson did not immediately respond to a request for comment by HOTELS.