Marriott Pursues Damages From Franchisee For Unauthorized Hotel Use As Migrant Shelter

Marriott International MAR has reportedly initiated legal action against one of its franchisees, accusing the operator of breaching their franchise agreement.

The dispute centers around a property in New York City’s Jamaica neighborhood, which was supposed to be run as a dual-branded Aloft and Element hotel.

Instead, the franchisee, Pride Hotel LLC, allegedly transformed the property into a migrant shelter under a contract with the City of New York, a move Marriott claims was unauthorized and harmful.

Also Read: Marriott Shares Drop 5% Despite Q2 EPS Beat; Slashed FY24 Outlook Disappoints Investors.

In a complaint filed in federal court last week, Marriott asserts that Pride Hotel entered into a “lucrative” contract with the City of New York without notifying Marriott or removing the company’s trademarks and branding.

In a Fox Business report, the hotel chain argues that this decision has caused “significant harm” to its brand and is seeking over $2.6 million in damages.

The issue of New York City hotels being repurposed as migrant shelters has gained significant attention. The city reportedly spends an average of $156 per room per night to house migrants, with some rooms exceeding $300 per night.

Citing a recent New York Post report, Fox Business adds that New York City has spent about $4.88 billion on the migrant crisis over the last few years, with nearly $2 billion directed towards housing, including shelters in motels and inns.

The legal battle underscores the broader challenges and financial implications for businesses and the city alike as New York grapples with the ongoing migrant crisis.

Price Action: MAR stock is down 0.6% to $214.55 at the last check on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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