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Lewis Trust Group, Owner of Ritz-Carlton Palm Beach, Sues The Ritz-Carlton Hotel Co.,
Marriott International Inc. and Avendra Inc. Claiming Entities
are Siphoning Profits Through Fees and Kickbacks

By Emily Roach, The Palm Beach Post, Fla.McClatchy-Tribune Regional News

July 12, 2011--MANALAPAN -- Ritz-Carlton Palm Beach's owner claims the corporate entities operating it are siphoning off profits through fees and kickbacks, and in February blocked it from seeing financial records that would explain where the money went.

Lewis Trust Group, which owns the hotel under the legal arm of RC/PB Inc., on Thursday sued The Ritz-Carlton Hotel Co., Marriott International Inc. and Avendra Inc., a joint venture Marriott has with Hyatt to manage its vendor contracts, seeking damages and termination of its management agreement.

The hotel owners also want a full accounting of the fees charged since Ritz-Carlton began managing the hotel .

The hotel owner claims the corporate entities have bilked it out of more than $75 million between the loss of operating revenue and damage to the hotel's value.

"The key here is discovery," said attorney Bill Bosch, who is representing the hotel owner. "We need to seek recourse from the courts to get Marriott and Ritz-Carlton to give us access to the information we have a right to."

That's because when the owners tried to find out what the fees were for, the management company gave half answers, the lawsuit claims, until the hotel owners served a notice of default in February. Then it got ugly.

When the owners' representatives showed up Feb. 22 to look at the financial records, they were unhappy with the continued lack of detail, according to the lawsuit.

When they said they were going to the hotel office to look at the books, security guards "physically barred the owner of the hotel from doing that, and that is extreme," Bosch said.

Ritz-Carlton disagrees.

"We believe that the allegations are unfounded and we believe that we have operated the hotel in an outstanding way," Ritz-Carlton spokeswoman Vivian A. Deuschl said.

She said she didn't know about a confrontation in February but emphasized that the Ritz-Carlton Palm Beach will remain a part of the Ritz-Carlton chain.

The hotel owner bought Ritz-Carlton Palm Beach -- the hotel actually stands in in 2003 at the urging of corporate representatives at Ritz-Carlton and Marriott, who projected it would make $11 million a year once it was updated and a spa was added, according to the lawsuit.

Lewis Trust Group through various legal entities did buy the property, repaired it after hurricanes in 2004 and 2005 and did an overhaul in 2006 to 2007 that added the recommended spa -- spending more than $120 million since its purchase.

Deuschl said Ritz-Carlton would not comment on the details of the litigation.


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