Two Hotel Owners Suing Marriott and Starwood Over Upcoming Merger

The Marriott and Starwood saga continues — this time, though, it's not a Chinese insurance firm that's trying to outbid Marriott.

Now, the owners of hotels in Chicago and New York are suing Marriott and Starwood on the grounds that the merger would violate exclusivity agreements. Cityfront Hotel Associates Limited Partners, the owner of the Sheraton Grand Chicago, and Dream Team Hotel Associates LLC, which owns the Westin New York at Times Square are suing the two hotel corporations. The grounds for the suit? The merger would unfairly eat into their business, as both of the properties represented are Starwood hotels (more on that below).

The plaintiffs in the case are suing on the grounds that the merger violates clauses in their contracts that prohibit Starwood from owning, franchising, operating or managing other hotels within a specific geographic area surrounding the two hotels. The Westin New York at Times Square is located within two blocks of one of the largest hotels in the city, the Marriott Marquis, which would become one of its biggest competitors, and also under the same umbrella of Marriott-Starwood when the merger is finalized.

Only time will tell if this lawsuit as any affect on the upcoming merger, which is expected to close in the middle of this year. If anything, this merger seems to be running into more roadblocks than expected.

To recap everything that's happened to date regarding the merger, check out these posts below:

May 1, 2015 — Rumors of IHG preparing a bid to acquire Starwood
October 28, 2015 — Starwood CEO Adam Aron mentions the possibility of a sale during an earnings call
November 16, 2015 — Marriott announces its intention to acquire Starwood
November 20, 2015 — Marriott CEO Arne Sorenson addresses questions about Marriott and SPG
January 22, 2016 — TPG chatted SPG with Marriott's Vice President of Loyalty
February 24, 2016 — TPG shares plans to attend a Marriott loyalty forum in Los Angeles
March 14, 2016 — Starwood and Marriott acknowledge Anbang's bid
March 18, 2016 — Starwood accepts Anbang's bid
March 18, 2016 — Starwood CEO Tom Mangas addresses the latest acquisition news
March 21, 2016 — Marriott Outbids Anbang with Latest Offer for Starwood
March 28, 2016 — Marriott Isn't Submitting a Higher Bid for Starwood Hotels
March 31, 2016 — Anbang Won't Be Acquiring Starwood After All
April 19, 2016 — Marriott's Integrating Some SPG Benefits Long Before the Merger

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H/T: Bloomberg