|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
April 28, 2009--Citing millions of dollars in losses, Aventura's Turnberry Isle resort is suing Fairmont Hotels, claiming the luxury chain has mismanaged the property after a $133 million renovation.
The dispute centers on Fairmont's attempt to arbitrate a standoff over $3 million in fees the company claims Turnberry owes. Turnberry insists Fairmont failed to position the 392-room property as a five-star destination following $133 million in renovations by the Soffer family, which developed the resort in the 1980s, reacquired it in 2005 and spent about a year renovating it.
But the lawsuit filed Friday in Miami-Dade Circuit Court also reveals another troubled holding in the Soffer portfolio.
Late last week, the Soffer entity building the Fontainebleau Las Vegas casino filed suit after banks cut off $800 million in construction funding amid dismal condo sales at the $3 billion venture. Meanwhile, the Fontainebleau Miami Beach, which Jeffrey Soffer and partners also acquired in 2005, is struggling with a battered vacation market after reopening in November following a $500 million renovation.
A spokeswoman for Fairmont declined to comment Monday, saying "as a private company, we do not comment on our relationships with hotel owners."
The lawsuit comes as a rapidly declining travel market is cutting into hotel profits or forcing owners to absorb losses.
Jeffrey Soffer is a principal in the family's development company, Turnberry Associates. The family earned their fortune when Jeffrey's father, Don, built Aventura out of swampland in the 1960s. The crown jewel of the portfolio is the Aventura Mall.
Fairmont Turnberry Isle Resort & Club targets wealthy vacationers seeking a more tranquil getaway than they can find in Miami Beach.
Fairmont began running the property in 2004, before the Soffers purchased it back. Hotel management companies typically run a hotel for a percentage of revenues, along with various fees the owners must pay.
Stuart Z. Grossman, a Coral Gables litigator, is representing the Soffers.
He said Fairmont refused to provide any documentation detailing why Turnberry owed the fees.
"It has two world-class golf courses and a tremendous location -- a beach club, everything you'd want. They can't turn a profit," Grossman said. The lawsuit claims Turnberry's owners have poured about $26 million into the resort to fund losses.
"We rely on them to market our property," he said. "We feel they haven't done a good job."
David Feder, the resort's managing director and a Fairmont employee, was hired by Jeffrey Soffer to run the Fontainebleau Miami Beach in 2006 after a long tenure running the Boca Raton Resort and Club. He moved to the Fairmont last year, and presides over a Fairmont team in Aventura charged with promoting the hotel.
"Most of their marketing staff would be in-house," said Scott Brush, a Miami hotel consultant. "The chain is promoting the name Fairmont, and the staff of the Fairmont Turnberry is promoting the Fairmont Turnberry."
Feder did not respond to an interview request Monday.
The lawsuit asks a judge to halt an arbitration proceeding that Turnberry claims needs to be delayed until someone familiar with South Florida's hotel market can preside over it. The suit also asks a judge to force Fairmont to turn over financial documents to Turnberry. But Grossman said Turnberry wants to oust the company from the resort.
"We do not want to do business with these people," he said. "We certainly think we can do a better job than they've done."
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