Marriott International Inc. early Sunday morning lost control of a Honolulu hotel that was part of Edition, a trendy new hotel brand the company is trying to jump-start.

In a dramatic move, the owners of the Waikiki Edition in Hawaii said Sunday that in the early morning hours they installed new management and changed the signs and locks on the hotel to reflect a new name, The Modern Honolulu. The changes were made in spite of a contract that allows Marriott to run the hotel as an Edition for 30 years.

The move is the latest escalation in a legal battle that began this spring between M Waikiki LLC, the owner of the stylish but unsuccessful hotel, and Marriott. M Waikiki claimed in a lawsuit filed in May in New York Supreme Court that Marriott had failed to make the flashy new Edition hotel brand a success, resulting in the Waikiki location underperforming relative to its market.

Marriott has filed a motion to dismiss that case.

Regarding Sunday morning’s action, Marriott Chief Operating Officer Arne Sorenson said in an emailed statement: “This is a deeply unfortunate, regrettable and illegal event. The owner and its partners raided the hotel literally under cover of night, forcibly taking over the property and threatening our employees with dismissal unless they immediately agreed to a change of management. We will aggressively and vigorously pursue all remedies against the owner and its partners in this illegal act, which was completely and blatantly in violation of Marriott’s contractual agreements.”

William Brewer, an attorney for the Waikiki Edition owners, said that his clients have the legal right to terminate the contract because Marriott is mismanaging the property and causing them to lose money.

Marriott announced Edition in 2007 with great fanfare but has struggled to build the brand amid a sharp downturn in the hotel industry.

Edition is a partnership with Ian Schrager, who is widely considered the inventor of trendy boutique hotels. At the time, Marriott predicted it would open 100 Edition hotels in 10 years. The new brand was designed to compete with Starwood Hotels & Resorts Inc.’s W brand and hotel brands like it.

However, the hotel in Waikiki is one of just two Edition hotels that have opened. The other is in Istanbul. Now, Marriott is investing its own money to develop additional Edition hotels, an unusual move for a company that nearly always relies on third-party owners. The company is investing $400 million in Edition locations in London and Miami Beach, which will open over the next year or two, Mr. Sorenson said in his statement.

M Waikiki, the Waikiki Edition owner, bought the hotel in 2006 for $112 million and spent more than $200 million to renovate it. M Waikiki is controlled by eRealty Fund LLC, a San Diego real-estate fund.

The Waikiki owners allege the brand isn’t growing quickly enough, making the hotel a virtual ghost town, unable to keep up with competitors. Some observers say that, in addition, one challenge the hotel faces is that, unlike many successful luxury hotels in Waikiki, it isn’t directly on the beach.

The owners say the hotel has lost $8.4 million since it opened in October 2010, with occupancy just around 30% in the fourth quarter of 2010, far below the 62% occupancy Marriott predicted in August 2009.

The loss projections for the remainder of 2011 were recently increased to $1.9 million from $1.2 million, owner representative Damian McKinney alleged in a letter sent Sunday to Mr. Sorenson of Marriott.

“Marriott has demonstrated that it is unable to attract an adequate volume of customers and at the [rates] necessary to make the Hotel profitable,” Mr. McKinney wrote. “Manager’s failure to perform compelled Owner’s actions.”

Mr. McKinney at 2 a.m. on Sunday hand-delivered a similar letter to the night manager on duty. Representatives of the hotel’s new management company, Aqua Hotels & Resorts, then came in to operate the hotel and Edition signs were quickly covered or changed to reflect the hotel’s new name, the Modern Honolulu, Mr. Brewer said.

Mr. Brewer said that aside from the hotel’s general manager, most employees have been offered continued employment at the Modern under the same terms.

“This is a peaceable transition,” Mr. Brewer said.

Mr. Brewer said there is precedent for owners wresting control of hotels out of the hands of managers they claim are mismanaging the hotel and losing owner money.

However, dismissing a hotel management company or brand can be difficult and costly.

One of the nastiest and most high-profile of owner-manager standoffs occurred at the former Four Seasons Aviara resort in Carlsbad, California, in 2009. Owner Broadreach Capital Partners—also a client of Mr. Brewer, the lawyer for the Waikiki Edition owners—sought to oust Four Seasons Hotels Inc. as the resort’s manager in a dispute over costs. But Four Seasons staffers physically blocked employees of Broadreach’s new management company from entering the resort. An arbitrator decided in 2010 that Broadreach had to pay Four Seasons an undisclosed fee to end its management contract of the resort. Broadreach subsequently converted the resort to a Park Hyatt.

Last month, another white-glove dust-up erupted when the owners of the Ritz-Carlton in Manalapan, Florida, near Palm Beach, sued Marriott, alleging that Marriott mismanaged the 310-room hotel and allowed its costs to mushroom out of control. Marriott said it “strongly disagrees” with the owners’ allegations and vowed to keep the property under its Ritz-Carlton brand.

Source: The Wall Street Journal

First properties to premier in Waikiki Beach and Istanbul

NEW YORK — EDITION Hotels marks the next chapter in the lifestyle hotel story. The new Brand was conceived by Ian Schrager in a partnership with Marriott International. It will combine the personal, intimate, individualized and unique lodging experience that Ian Schrager is known for, with the global reach, operational expertise and scale of Marriott. This delicate balancing act will encompass, for the very first time, not only great design and true innovation, but also great personal, friendly, modern service as well as outstanding, one-of-a-kind food, beverage and entertainment offerings…”all under one roof.”

Each highly stylized hotel will function as a “home away from home” for leisure and business travelers. In addition, each hotel will cater to the modern day business traveler by offering functional, technologically sophisticated working environments that provide the comfort and ease of actually conducting business in an “office away from the office.”

The heightened experience, authenticity and originality that Ian Schrager brings to this new Brand coupled with the global reach of Marriott will result in a truly distinct product that sets itself apart from anything else currently in the marketplace. It is nothing less than an attempt to push the boundaries, break new ground and take the hotel industry to a whole new level. EDITION will be completely new, different and original offering an experience never before seen in the industry. It will be the first truly global branded lifestyle hotel on a large scale, setting the standard for decades to come.

EDITION will debut in Waikiki Beach October 2010 and will also open a property in Istanbul later this year. Planned openings are also scheduled in 24-hour international gateway cities such as Mexico City, Barcelona, Bangkok, and several other cities in various stages of development.

EDITION responds to new emerging cultural and social imperatives. The new Brand will reflect these changing lifestyles and cater to a vast underserved market of guests expecting and in turn demanding a unique experience, not merely a place to sleep. It is an evolutionary response to the desire for a sophisticated hotel experience. This reinvented and rethought experience will now, for the first time ever, be widely accessible and available in key lodging destinations across the globe and to everybody around the world who wants it.

EDITION is an unexpected, refreshing collection of individualized, customized, one-of-a-kind hotels that is the antithesis of an institutional “hotel chain” and a true paradigm shift in the industry. Each hotel with its rare individuality, authenticity, originality and unique ethos will reflect the best of the cultural and social milieu of its location and of the time. Although all of the hotels will look completely different from each other, the Brand’s unifying aesthetic will be in its approach and attitude to the modern lifestyle rather than its appearance. As a result, design and architecture is derived from the scale, location and feel of the individual properties rather than from contrived decorative cliches or unnecessary gestures. The Brand will be about an attitude and the way it makes you feel rather than the way it looks. Sophisticated public spaces, finishes, design and details will serve the experience, not drive it.

“Ian Schrager’s concepts have revolutionized both nightlife and hospitality. Time and time again he succeeds in making people feel as if they are part of something new, unique and special, always eliciting an emotional and visceral connection to the experiences he creates. His concepts have been and continue to be widely imitated around the world,” says Bill Marriott, Chairman and CEO, Marriott International.

For EDITION, Schrager brings his original vision, passion and commitment to excellence to create something truly special in collaboration with Marriott. “People do not want something derivative. They want the real thing and this is the whole idea behind EDITION,” says Schrager. The role of Mr. Schrager is to act as a creative consultant and lend his vision for concept, design and marketing. His ground-breaking concepts give the Brand a true competitive edge, product distinction and a huge advantage over what is currently offered. However, the ultimate decisions on design, concept and operations are made by the property owners, developers and Marriott.

EDITION will showcase the best dining and entertainment options, services, amenities and offerings for guests and locals in the know. The Waikiki EDITION, designed by Yabu/Pushelberg, will offer a restaurant by world-renowned chef, Morimoto; the exclusive Crazybox nightclub; a unique Sunrise Pool with lushly landscaped gardens by Deborah Nevins; an exclusive Private Sunset Beach with its own lagoon and imported sand from the neighboring Hawaiian islands, providing the same experience as actually lying on a beach; an intimate Lobby Bar hidden behind a secret passage as if tucked away in a castle; a Bar at the Sunrise Pool and Bar at the Private Sunset Beach both under the sun and stars with spectacular views of the Harbor and Pacific Ocean; custom and individually designed Surf and Bikini Boot Camps, the first of their kind, for the ultimate in physical fitness, dramatic weight loss and loss of inches together with custom vegetarian and organic spa menus. This together with a full service spa will offer guests the unique opportunity to actually go on vacation and come home looking better, feeling healthier and pounds lighter!; the largest luxury ballroom on Oahu for weddings and special events; an outdoor movie theatre under the stars, akin to a drive-in theater without the cars, offering first run movies, video and art installations; EDITION retail shop, and much more. Once entering this Urban Resort with its own unique, separate intense reality that offers the best of Waikiki, there will be no need to leave the hotel for anything including dining, relaxing or entertainment.

Opening later this year, The Istanbul EDITION, designed by Gabellini/Sheppard, will offer 77 oversized guest rooms and suites with Rosewood or Soaped Oak walls, ceilings and floors, each like a unique and precious wood jewel box; the finest custom materials, exotic finishes and fabrics in the world; silk area rugs; marble guest bathrooms with floor to ceiling glass enclosed rain showers; world-renowned Cipriani Restaurant; a double height ceiling lobby with gold and silver leaf mosaic detailing and travertine floor and walls; private check-in; a Lobby Bar with private garden terrace; exclusive private event space; Penthouse floor Ballroom; a private club in the sky; a 2,400 square foot one-of-a-kind Penthouse with custom fabrics, furniture and exotic finishes throughout; 20,000 square foot spa by ESPA; high-end, luxury retail boutiques; a private drawing room with honesty bar and screening room for first run movies and private screenings. The Istanbul EDITION will be the picture perfect cultural mix of East meets West.