Renaissance Out, Loews in at 137-Room Beverly Hills Hotel

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Renaissance Out, Loews in at 137-Room Beverly Hills Hotel

By ANDY FIXMER

Staff Reporter

A group from Loews Hotel Inc. has taken over management of the Renaissance Beverly Hills hotel after the hotel’s owner, Strategic Hotel Capital LLC, fired the previous operator for failing to meet performance goals, according to Strategic.

The dismissal of Renaissance Hotels & Resorts, owned by Marriott International Inc., is the latest salvo in an ongoing battle.

Chicago-based Strategic last summer sued Marriott in L.A. Superior Court, alleging that its management was defrauding its hotels in Beverly Hills, Laguna Beach and Rancho Mirage of money, stealing confidential customer information, and charging it indiscriminately for expenses. Marriott has filed a counterclaim.

While the hotel on Beverwil Drive was among the properties cited in the suit, both Strategic and Marriott said the recent dismissal was unrelated to the court battle.

Strategic spokesman John Sullivan said Renaissance management failed to meet certain financial objectives outlined in its contract, enabling Strategic to invoke an exit clause.

“We constantly review the performance of our properties and Renaissance was terminated for lack of performance and replaced by Loews,” he said.

Roger Conner, Marriott’s vice president of communications, said the chain would not challenge the dismissal.

“It was the owners decision to fly a Loews flag,” he said. “That change, that process, has nothing to do with the litigation.”

The contract was signed in January 2000. Though terms were not disclosed, operator’s contacts generally run between 20 and 30 years.

Sara Harper, a Loews spokeswoman, said the hotel finished 2002 with an occupancy level of 69 percent, higher than both the Beverly Hills and West L.A. markets in the same period.

Marriott’s staff vacated the 137-room hotel about four weeks ago and the name was changed at the beginning of July to Loews Beverly Hills Hotel. Strategic also owns the Loews Santa Monica Beach Hotel on Ocean Avenue.

“It literally was a Renaissance one night and then a Loews the next,” said Harper. “We switched out the soaps and towels, took down a few signs and that was it.”

For Strategic, extricating itself from the contract might not prove as simple in light of the pending litigation.

“It’s something of a gamble for Strategic to terminate the management without the court resolution,” said hospitality attorney William A. Brewer, a partner in Dallas-based Bickel & Brewer, who is not involved in the litigation. “If they lose the case, they could owe a bunch of money.”

Brewer said if Strategic is found to have acted prematurely in exiting its contract with Marriott, it could be forced to pay a sum equal to what the operator would have earned over the life of the contract, including bonuses.

“Had they waited for the resolution, they could have been wrong but there wouldn’t have been any downside,” he said.

Marriott, he said, charges high commissions and fees. A two-year long travel slump may be taking its toll on the hotel, which could more easily make its debt burden with a less expensive management company, he said.

“Generally speaking, when an owner asks management to leave before a judicial ruling, it’s typically because they have an economic incentive,” Brewer said. “This is a strategy is pursued when there’s no economic alternative.”

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