Dec242010

Hilton Settles Starwood Trade Secrets Theft Lawsuit – No New Luxury Boutique Hilton Brand before 2013

Hilton Worldwide settled the two year old trade-secrets case brought by Starwood Hotels. In June 2008 two former Starwood luxury brand executives became Hilton executives. The job move included taking thousands of W Hotels proprietary documents in an effort to fast-track the launch of Denizen Hotels, a Hilton luxury boutique brand modeled after W Hotels lifestyle brand success.

The Cosmopolitan Hotel Las Vegas, finally opened last week, was the hotel project announced in March 2009 to become the first Hilton Denizen Hotel. Starwood filed an April 2009 lawsuit accusing Hilton of corporate espionage by using Starwood brand development materials taken by Klein and Lalvani to fast-track the new Denizen hotel brand. The court issued an injunction in April 2009 against Hilton to cease development of the Denizen boutique brand.

Ross Klein and Amar Lalvani were the named Starwood executives in the center of this trade-secrets corporate theft case when their move from Starwood to Hilton in 2008 included transferring over 100,000 documents related to Starwood W Hotels development to their new employer Hilton.

Ross Klein had been President of Starwood’s Luxury Brands Group when he changed employer in June 2008 after five years with Starwood Hotels to become Hilton’s Global Head of Luxury & Lifestyle Brands. Klein had been the creative lead for the division that launched Starwood’s aloft hotels.

Amar Lalvani had been Starwood’s Senior Vice President responsible for development of Starwood’s luxury brands. Lalvani also served as global head of W Hotels development. Lalvani’s title at Hilton was Global Head of Luxury & Lifestyle Brand Development. Prior to Starwood Lalvani worked as an associate in the Blackstone Group’s Mergers & Acquisitions.

Hilton Worldwide was purchased by Blackstone Group in July 2007 for $26 billion dollars.

Hilton Settlement Deal

  • Hilton makes $75 million cash payment to Starwood.
  • Starwood is entitled to another $75 million in hotel management contracts.
  • Hilton is subject to an injunction on introducing a lifestyle hotel brand before January 2013.

 

Sources: New York Times – Hilton and Starwood Settle Dispute (Dec 22, 2010)

Los Angeles Times – Hilton Settles with Starwood in Trade-Secrets Case (Dec 24, 2010)

Las Vegas Sun – New Hilton Brand Expected to Replace Cosmopolitan (Mar 11, 2009)

Hotel-Online.com – Hilton Hotels Makes Significant New Executive Appointments; Two Former Starwood Execs, Ross Klein and Amar Lalvani, Join Hilton to Advance its Goal of Developing a Presence in the Luxury and Lifestyle Sectors (June 2, 2008)

The Cosmopolitan Las Vegas might have been The Denizen by Hilton

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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