Marriott sues franchisee for turning New York hotel into migrant shelter

A hotel chain is suing one of its franchisees for violating a contract by turning a property in New York City into a shelter for migrants.

Marriott International filed a lawsuit in federal court last week suing Pride Hotel LLC, in Jamaica, Queens, for $2.6 million over its “wrongful abandonment and breach of its contracts,” according to court documents.

“Pride Hotel was slated to open to the public last November under Marriott’s budget-friendly Aloft and Element hotel brands, according to the complaint filed in federal court,” Gothamist reported. “Instead, the hotel and its principals abandoned the deal with Marriott and began operating as a migrant shelter, without Marriott’s permission and in violation of their franchise agreement, the suit alleges.”

The owners, who include New York residents Jai Patel, Krishna Mehta, Chandra Mehta, Jagruti Patel, and Vipul Patel, according to the filing, chose to violate the franchisee agreement and opted to enter into a “lucrative” contract with the City of New York.

“But instead of fulfilling its obligations under the Franchise Agreements, Pride Hotel, and the other defendants never opened the Hotels as Marriott properties and, instead, entered a lucrative agreement with the City of New York to use the Hotels to house migrants and asylum seekers without Marriott’s permission and in violation of the Franchise Agreements,” the filing states.

“The Hotels are in a desirable and competitive market because of their proximity to the John F. Kennedy International Airport. But it will be difficult, if not impossible (and even if it were possible, it would likely take many years) for Marriott to re-enter this specific market because it is already saturated with existing hotels,” the complaint continues.

Their actions caused “significant harm” to Marriott, the suit states, noting that the hotel chain’s trademarks and branding were not removed from the property before it opened its doors to migrants as a shelter.

A certificate of occupancy issued by the city’s Department of Buildings in July shows the building has 18 floors and 283 rooms. New York City currently pays hotels upwards of $150 and more per night for each room to house migrants. According to The New York Times, more than 1 in 5 of the city’s hotels have been turned into shelters, further pushing hotel prices to skyrocket in the area.

In a CoStar analysis last November, more than 16,000 hotel rooms in the New York City area were being used to house the illegal migrants with 140 hotels no longer serving regular customers in need of hotel accommodations.

The analysis noted that although “only 33 hotels are currently permanently closed, there is a possibility that the other projects will never be used as hotels again once the long-term contracts expire.”

Last year, attorneys for Pride Hotel presented Marriott with the shelter option instead of the agreement they had made, according to the complaint, saying in a letter that it wasn’t “economically feasible” to operate as a hotel due to “the poor state of the economy and continued slowdown in the hospitality industry.”

“New York City is pressuring hotels in the metropolitan area to participate in its migrant housing programs,” the letter claimed.

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Frieda Powers

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Originally from New York, Powers graduated from New York University and eventually made her way to sunny South Florida. Powers also contributes to BizPac Review.

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