Schrager: Waikiki Edition lawsuit ‘frivolous’

NEW YORK CITY After almost a week of public silence on the topic, Ian Schrager is going on the offensive in response to the lawsuit filed against him and Marriott International Inc. by the owners of Waikiki Edition.

In a statement distributed to media outlets Wednesday evening, Schrager promises to “vigorously” defend the lawsuit.

“I’m going to let the hotel, media and customer reviews speak for themselves,” Schrager says. “The Edition Waikiki, in its first six months, has received rave reviews. Marriott is the best operator in the business, but they can’t stop the affects of the earthquake and tsunami in Japan.

“While it’s true I didn’t build, develop, manage or make all the final decisions for this property, since my name and reputation are involved, I want it to be as good as it can be. This lawsuit—I can only speculate on their motives—is not only completely transparent and frivolous, it is an abuse of process. We intend to defend ourselves vigorously.”

Last week, hotel owner M Waikiki LLC sued Schrager and Marriott in New York state court, claiming that they have not done enough to make the nascent Edition brand successful. The lawsuit seeks unspecified financial damages in addition to the termination of Marriott’s 30-year management deal.

William A. Brewer III, lead counsel representing the owner, tells HOTELS that blaming the Japan disasters for the hotel’s poor numbers to date does not explain why Edition Waikiki is running at just 37% performance relative to its competitive set, as detailed in the lawsuit.

“Blaming the failure of the hotel on the tsunami or any other catastrophe begs an obvious question: ‘Why haven’t competitors to the Waikiki Edition been similarly impacted?'” Brewer says.

The lawsuit, which claims that Schrager has been uninvolved in the Edition brand, was filed just days after the famed hotelier launched a new brand, Public, which aggressively eschews many of the trappings of the boutique hotel craze that he helped create two decades ago.

Edition Waikiki has lost about US$6 million since its October opening, posting average occupancy of about 30% in the fourth quarter—half of what Marriott had predicted in 2009, according to the lawsuit.

Waikiki Edition launched last year as the first property under the Edition brand, which was jointly conceived by Schrager and Marriott. To date, just one other property has opened, in Istanbul, though future projects have been announced for Miami, Bangkok, Mexico City, London and Barcelona.

Waikiki Edition
Waikiki Edition