WHITE PLAINS, NY—Starwood and Hilton, two of the world’s largest hotel chains, are at each other’s throats in a multi-million-dollar corporate espionage lawsuit filed in Federal Court here.(Hilton's Beverly Hills, CA headquarters building, top right photo)
The suit alleges former Starwood executives Ross Klein and Amar Lalvani stole more than 100,000 electronic and hard-copy files related to the emerging lifestyle hotel market, before and after they were hired away by Hilton in 2008.
The suit alleges the stolen files focused on Starwood’s W hotel brand.
Hilton, acquired by New York City-based Blackstone Group in 2008, is rushing to come out with its new lifestyle brand called Denizen.
The Beverly Hills, CA-based chain plans to showcase Denizen in several major cities, including Beverly Hills and Abu Dhabi.The suit aims to stop the debut of this brand.
Denizen is expected to compete with independent hotels and boutique properties, including Starwood’s W line, Morgans Hotel Group Co. and Thompson Hotels.
The suit also will be asking for punitive and compensatory damages totaling “in the millions,” according to industry sources in a position to know.
The suit is expected to take at least a year to settle, according to persons familiar with similar court actions.Hilton spokesman Michael Buckley called the suit “frivolous and without merit.” He says Hilton will vigorously defend itself against the allegations.
Starwood’s lead lawyer Kenneth Siegel charges Hilton’s alleged theft amounted to a “wholesale looting of proprietary Starwood information.”
He calls the action “a blatant case of theft of trade secrets.”
Siegel says the stolen files included “a step-by-step playbook for creating a lifestyle luxury hotel brand.”
But the most damaging aspect of the alleged theft was that the files “enabled Hilton to launch a new brand in only nine months instead of the usual three to five years,” Siegel charges.
Klein was the former president of Starwood Luxury Brands Group. Lalvani was senior vice president of that unit. At Hilton, Klein is head of luxury and lifestyle brands; Lalvani, is head of development for the same division.
Besides the W brand, Starwood operates the Sheraton and St. Regis hotel chains.
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