A franchisee for Marriott International is being sued by the parent company for an alleged breach of contract made by converting a hotel into a shelter for migrants, just before the site’s grand opening.
In the lawsuit, filed August 5 in the Southern District of New York federal court, Marriot alleges franchisee Pride Hotel abandoned and breached its contract by opening the facility to an unauthorized “alternative use.”
Marriott is demanding payment for damages totaling at least $2.6 million.
The conversion of the Jamaica, New York, hotel into something of a migrant shelter happened without Marriott’s permission, the parent hotel giant claims.
“After more than eight years of construction and development caused by numerous delays by Pride Hotel, and just months before its deadline to open the Hotels, Pride Hotel willfully breached the Franchise Agreements so it could instead pursue a lucrative government contract to provide shelter to migrants and asylum seekers,” Marriott’s lawsuit states.
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The construction of the hotel was no small matter.
In August of 2015, real estate news website The Real Deal revealed the Pride group purchased a site in New York City for $5.3 million in March of that year.
The building application was for a massive 18-story, 110,000-square-foot hotel boasting 283 keyed rooms.
Pride’s building was to open under Marriott’s Aloft and Element brands.
Will Marriott win this lawsuit?
A deadline to open the facility given by Marriott was extended multiple times, with the final “sixth opening date deadline” being slated for November 1, 2023. Just months before the deadline was when the parent company realized something was wrong.
“On or about August 14, 2023, while working on a different project at a nearby property, one of Marriott’s opening managers noticed that people appeared to be moving into the Hotels,” the lawsuit states.
Marriott says it was not informed the hotels were complete and ready for lodgers and was kept in the dark about the migrants. The day after this discovery, Pride Hotel’s attorneys issued a letter to Marriott claiming it is not “economically feasible” for the hotel to operate and that New York was pushing for migrants to be housed there.
Any attempts by Marriott to work the situation out with the Pride group completely fell apart.
Marriott claims the franchised hotels were taking in migrants under contract with New York City while still using the parent company’s marks and signage, all without paying agreed-upon franchise fees.
In March of this year, Marriott cut all franchise agreements with Pride.
A demand was made for Pride to pay damages for the contract’s premature termination, a request which has allegedly not seen any money sent.
The migrant surge has not only been a conflict point between hospitality giants and franchisees, but has also caused serious issues for average people in the city.
Earlier this year, the price of hotel rooms in New York City surged to hundreds of dollars. The increase was due to a perfect storm of conditions, including illegal immigrants being granted a major portion of the city’s hotel rooms.
The disruption is not just financial in nature.
In June, an illegal immigrant being housed at a New York hotel allegedly shot two NYPD officers during a routine traffic stop.
