Hotel Drama: Setai Ousts Management at Midnight, Eden Roc Takes Theirs to Court
Big drama at two of Miami's best known hotels this weekend, as two iconic resorts had some dramatic shake-ups on the business side. The owners of the Eden Roc, a Miami Beach classic, are taking their management company to court. Meanwhile, the owners of the Setai, a member of the new guard of Miami Beach luxury hotels, just decided to oust their management company at midnight on Saturday. Most rank-and-file employees will likely keep their jobs, but the higher-ups are apparently out of work.
In some cases, owning a hotel and actually operating that hotel are two different things. The business that owns a resort will contract a company that specializes in hotel management to take care of the day-to-day business of the property. Those are the types of companies that do everything from setting room rates to making sure you have enough towels in your room. However, owners and management don't always get along.
The Setai is owned by a subsidiary of what's left of Lehman Brothers. Since the hotel opened in 2004 it's been operated by Singapore-based General Hotel Management, but apparently the zen-like property at 20th Street and Collins Avenue hasn't quite had zen-like profits or service lately.
So at midnight on Saturday, William Brewer III, a lawyer representing the ownership, orchestrated an ouster of GHM and brought in a new company in the early hours of Saturday. The transition came as a surprise to GHM, and apparently police were on the scene, but things seemed to go smoothly.
"It happened without incident. It's been a seamless transition for the guests," Brewer told USA Today.
According to USA Today, the owners claimed the operators lost $7.6 million in potential profit during 2010 and 2011 alone. Dallas-based Trevi Luxury Hospitality Group is now in charge. Most employees are expected to keep their jobs.
Meanwhile, the Eden Roc's management shuffle will take place in the courtroom. According to Business Week, Eden Roc's owners have sued operators Marriott International for $75 million and claim "gross mismanagement." Owners have invested $300 million in the hotel in recent years, including a $240 million renovation, but Marriott has seemingly failed to turn those investments into profit.
The owners claim Marriott flooded the hotel with discount bookings, and failed to only bring in a fraction of expected profits.
"In the face of Renaissance's failures, Eden Roc has quite literally shoveled money into the project to make up for Renaissance's incompetence," reads the complaint. "And while Eden Roc loses its shirt, Renaissance and its parent company and guarantor, Marriott International, have lined their pockets with management fees."
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