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Starwood files lawsuit against Le Parker Meridien NYC after "$1m ripoff scam"

Starwood files lawsuit against Le Parker Meridien NYC after "$1m ripoff scam"

 
Old Jan 8, 13, 12:49 pm
  #16  
 
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No. If any action is going to be taken to end the SPG relationship, it will take some time for this to work it's way through the courts or arbitration.
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Old Jan 8, 13, 1:06 pm
  #17  
 
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Originally Posted by Rusty65 View Post
I think this is revealing in tying our usage of free stays to whether Hotels benefit by our stays. We have heard on flyertalk that occupancy drives the rates at which hotels are compensated. It seems that Le Parker had been artificially inflating the occupancy rates to receive more from Starwood.

It seems hotels can sell out the available rooms for cheap and get more revenue from the starwood for the rooms redeemed using points. Or in this case, not even sell those rooms but pretend you did. Allegedly. If true, I don't see how Starwood could continue to do business with the owners. That is a shame because despite the questionable business practices here and with the additional fees, I liked Le Parker Meridien for its location in New York and had been treated well enough to continue to utilize it.
If the hotel told SPG they had sold rooms when they didn't then this would affect their APR, which would in turn affect their SPG category. So essentially anyone who used points at either property was defrauded.
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Old Jan 8, 13, 3:01 pm
  #18  
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As this appears to be a significant news story which may impact spg participation and award stays at some point in the future, I've retitled the thread and we'll run it separate from the main hotel master thread.

/mod

Last edited by Oxon Flyer; Jan 8, 13 at 3:08 pm
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Old Jan 8, 13, 4:00 pm
  #19  
 
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I'm wondering how such a scam would actually work.

SPG guests book through SPG.com, points are deducted from their account, etc. then they stay at the property and then LPM gets paid some amount by SPG. How can LPM fake this? Wouldn't they have to provide SPG account numbers of people who stay, which SPG could immediately check to confirm/deny that they made bookings?

I understand that on high-occupancy nights, properties are reimbursed at a higher rate when a SPG guest stays on points. Could they fake their occupancy rate to get a higher payout, on reservations that are real?
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Old Jan 8, 13, 4:35 pm
  #20  
 
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Originally Posted by Spent_All_My_Miles View Post
I'm wondering how such a scam would actually work.

SPG guests book through SPG.com, points are deducted from their account, etc. then they stay at the property and then LPM gets paid some amount by SPG. How can LPM fake this? Wouldn't they have to provide SPG account numbers of people who stay, which SPG could immediately check to confirm/deny that they made bookings?

I understand that on high-occupancy nights, properties are reimbursed at a higher rate when a SPG guest stays on points. Could they fake their occupancy rate to get a higher payout, on reservations that are real?
Typically in exchange for the LM brand, the property would pay a franchise fee on all room revenue - a few %. They could potentially fake direct bookings (e.g not through SPG.com)?
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Old Jan 8, 13, 5:47 pm
  #21  
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Originally Posted by tcook052 View Post
So to bring the topic back on track should I and others staying at LPM in the short term have cause for concern?
There should be no change to day-to-day operations or the guest experience, and we expect Parker to honor all reservations and all agreements with customers at both Le Parker Méridien New York and Le Parker Méridien Palm Springs.

Best regards,

William R. Sanders
Social Media Specialist
Starwood Hotels & Resorts Worldwide

[email protected]
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Old Jan 8, 13, 5:58 pm
  #22  
 
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Originally Posted by Spent_All_My_Miles View Post
I'm wondering how such a scam would actually work.

SPG guests book through SPG.com, points are deducted from their account, etc. then they stay at the property and then LPM gets paid some amount by SPG. How can LPM fake this? Wouldn't they have to provide SPG account numbers of people who stay, which SPG could immediately check to confirm/deny that they made bookings?

I understand that on high-occupancy nights, properties are reimbursed at a higher rate when a SPG guest stays on points. Could they fake their occupancy rate to get a higher payout, on reservations that are real?
The reimbursement to LM from SPG on award stays depends on occupancy in the hotel, not just the number of SPG award stays.
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Old Jan 8, 13, 6:29 pm
  #23  
 
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Originally Posted by Starwood Lurker View Post
There should be no change to day-to-day operations or the guest experience, and we expect Parker to honor all reservations and all agreements with customers at both Le Parker Méridien New York and Le Parker Méridien Palm Springs.

Best regards,

William R. Sanders
Social Media Specialist
Starwood Hotels & Resorts Worldwide

[email protected]
Does no change mean they're still going to be surly and provide minimal benefits?
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Old Jan 8, 13, 6:30 pm
  #24  
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Presumably the phantom guests didn't book through Starwood so that the hotel could avoid paying commissions, but one wonders whether spg.com at times showed the hotel as sold out when there were rooms available. Of course, they could have avoided this impact by canceling some of the phantom reservations as the hotel reached capacity.

It's almost surprising that SPG didn't notice strange booking patterns, such as lots of reservations made directly with the property at the last minute when the hotel also had lots of reservations on points for the same nights. Or even just that they claimed to be selling a bigger fraction of their rooms than comparable properties.

I wonder how close some employees are to criminal prosecutions if they knowingly committed fraud over a long period. If they faked tax records too, I would imagine that someone is in trouble. However, aren't auditors supposed to catch such discrepancies? If they're publicly held, there would be penalties for falsifying annual reports, which Starwood should have been able to access for comparison with what the hotel was reporting to SPG.
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Old Jan 8, 13, 6:35 pm
  #25  
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Originally Posted by beachfan View Post
The reimbursement to LM from SPG on award stays depends on occupancy in the hotel, not just the number of SPG award stays.
Surely it depends on how much is being paid for the occupied rooms too, or at least it should. Otherwise there would be an incentive for offer deep discounts or do price line when the hotel is near the threshold for the higher rate. My understanding is that there is a two-tier compensation rate for each category (and season), so that there would be cases where selling one more room at almost any price could be highly lucrative if there are enough award reservations. OTOH, if ex post occupancy (rather than reservations at some cutoff point) is used, it would be unclear until the last cancellation deadline or later whether the property had in fact hit the magic number for each night.
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Old Jan 8, 13, 10:52 pm
  #26  
 
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Wow ... I'd be hesitant to stay there because they might use my Starwood account info to "claim" stays after I left falsely. Obviously they aren't to be trusted with customer info it seems based on my quick read of the article.
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Old Jan 9, 13, 5:54 am
  #27  
 
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Originally Posted by BigBopper View Post
Does no change mean they're still going to be surly and provide minimal benefits?
^^^

Originally Posted by MSPeconomist View Post
It's almost surprising that SPG didn't notice strange booking patterns, such as lots of reservations made directly with the property at the last minute when the hotel also had lots of reservations on points for the same nights. Or even just that they claimed to be selling a bigger fraction of their rooms than comparable properties.
This makes no sense and is a nightmare.

Keep this place at a distance, but i think if you do get the chance to talk to them, they will open up. That depends really on the guest.
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Old Jan 9, 13, 7:13 am
  #28  
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Anyone found the court documents of this one yet?

Will look through PACER later.
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Old Jan 9, 13, 8:19 am
  #29  
 
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Haven't had a chance to pull the filing on PACER yet. But I believe this is the case (Interesting that Starwood wants a jury trial if this summary is correct):

Starwood Hotels & Resorts Worldwide, Inc. et al v. PM Hotel Associates, L.P. et al

Plaintiffs: Starwood Hotels & Resorts Worldwide, Inc. , Starwood (M) International, Inc. and Preferred Guest, Inc.

Defendants: PM Hotel Associates, L.P. and Parker Palm Springs L.L.C.

Case Number: 1:2013cv00038
Filed: January 2, 2013

Court: New York Southern District Court

Office: Foley Square Office

County: XX Out of State

Presiding Judge: Katherine B. Forrest

Nature of Suit: Contract - Other Contract

Cause: 28:1332

Jurisdiction: Diversity

Jury Demanded By: Plaintiff
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Old Jan 9, 13, 8:27 am
  #30  
 
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Such a pity. The location of the property was ideal for me even if the service was somewhat variable.

Fortunately this is NYC so there are many properties to choose from. Still, I was rather looking forward to staying at that location on my next visit.
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