Starwood to Hilton: Pay up!

Still a hot hospitality industry brand discussion is the recently settled lawsuit between Starwood Hotels & Resorts Worldwide and Hilton Worldwide. The suit centered around 100,000 pages of confidential information that Hilton illegally obtained about Starwood’s “W”Hotels brand development. Starwood launched the W Hotels brand in 1999 and has grown it to over 30 hotels in the “lifestyle” brand category since.

What is the “lifestyle” brand category? Most refer to this as the segment of properties that appeal to a certain demographic. For example, the W Hotels brand was designed to attract the young and affluent who enjoy surrounding themselves with sleek, sexy furnishings and upscale atmospheres. A lucrative market, W Hotels continues to make a splash when entering a new city.

This classic corporate espionage scenario allegedly involved senior executives who left Starwood and, well, perhaps they forgot about any employment contracts they may have signed regarding brand security, non-compete agreements, et al? Brand security is key to maintaining market share and large corporations usually employ contractual tools to keep secrets where they belong.

Key to the topic is the settlement freeze put on Hilton’s “Denizen” brand as part of the settled lawsuit; it was allegedly drawn from Starwood’s W Hotels successful blueprint. Along with $150 million in compensation for damages, Hilton is not allowed to create any “lifestyle” hotels for the next two years. Maybe during the next two years Hilton will spend some time identifying an emerging lifestyle category and create a new brand for that market?

This lawsuit has me considering the impact of brand security and what new lifestyle markets in the lodging industry have yet to be discovered!


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