New Hilton brand Denizen under legal threat from Starwood Hotels
17 Apr 2009
Starwood Hotels & Resorts Worldwide sued Hilton Hotels and two senior executives in federal court on Thursday, claiming confidential information had been stolen during Hilton's pursuit of a new ''lifestyle'' chain.
Ross Klein, head of luxury & lifestyle brands, and Amar Lalvani, head of development for the segment, were the Hilton executives named in the suit. Both had been Starwood executives closely involved in the company's W Hotels brand before being hired by Hilton last year. The Blackstone Group took Hilton private in 2008 in a leveraged buyout. (See: Blackstone acquires Hilton Hotels for $26 billion)
Filed in federal court in New York, Starwood's suit alleges that Hilton stole more than 100,000 electronic and hard copy files containing trade secrets to help it expand its luxury hotel offerings. "The large volume of confidential information taken is extraordinary," the filing says.
Hilton said in March that it would start a brand called Denizen that would rival Starwood's offerings, with developments planned in cities including Beverly Hills, California, and Abu Dhabi. The suit seeks to stop the projects as well as monetary damages. (See: Hilton Hotels launches new brand, Denizen)
In a statement, Hilton senior vice president Ellen Gonda said that Hilton "believes this lawsuit is without merit and will vigorously defend itself." Hilton intends to move ahead with the development of Denizen, the statement said.
The complaint said the two executives ''stole massive amounts of proprietary and highly confidential Starwood information which was used to expedite Hilton's entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so.''
Hilton stood to gain time and money from allegedly stealing Starwood's trade secrets, said Starwood's general counsel, Kenneth Siegel, in a statement. "The wholesale looting of proprietary Starwood information, including a step-by-step playbook for creating a lifestyle luxury hotel brand, unfairly enabled Hilton to launch a new brand in only nine months instead of the usual three to five years," he said.
