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Starwood sues Hilton over Denizen; Denizen project temporarily suspended

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  • #16
    Originally posted by trekkie View Post
    It is very much about money for starwood. If they decide to go through with the legal action, they are pursuing either monetary damages or injunctions in part due to estoppel theory.

    What you are advocating is that management should be entitled to carry out the legal suit at the expense of customers and other stakeholders.

    You are simply not considering the long term consequences. Your statements on losing customer loyalthy is largely a macro issue and difficult to quantify. Customers leave a brand for various reasons.
    I expect a big company like *wood would've done its sums properly before going ahead with issuing such proceedings. Feel free to correct me if you happen to know *wood's own finances better than *wood themselves do.

    I find your argument hard to justify as I can't see how things are done "at the expense of customers and other stakeholders." Clearly, proceedings are issued because of the amount of money and effort *wood has put into the W concept. Thus when a competitor has allegedly engaged in dishonest and unfair conduct that could be at a significant financial detriment to Starwood, the right thing to do would be try to stop that conduct by legal means. The legal expenses incurred are well justified when compared to the not insignificant damages to brand integrity and other associated future losses, in particular the loss of future revenue through the loss of loyal customers.
    Last edited by KeithMEL; 24 April 2009, 07:00 PM.
    All opinions shared are my own, and are not necessarily those of my employer or any other organisation of which I'm affiliated to.

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    • #17
      deleted
      Last edited by trekkie; 23 September 2010, 10:51 PM.

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      • #18
        To go off on a completely different tangent - does anyone else find the branding "Denizen" to be a bit dark sadomasochistic in nature?

        I mean the first thing that came into my head when I heard the word Denizen was an S&M Club...

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        • #19
          Originally posted by trekkie View Post
          It is very much about money for starwood. If they decide to go through with the legal action, they are pursuing either monetary damages or injunctions in part due to estoppel theory.

          What you are advocating is that management should be entitled to carry out the legal suit at the expense of customers and other stakeholders.

          You are simply not considering the long term consequences. Your statements on losing customer loyalthy is largely a macro issue and difficult to quantify. Customers leave a brand for various reasons.

          I remind you that the group earnings release last quarter was 4.7% loss and their operational management revenue is expected to remain flat or even decrease for rest of the year. the statement indicated they are looking to increase the figure. If a huge expense has to be spent on this issue and operations revenue cannot be raised by much, the only way the group can adjust is by cost cutting and loyalthy member benefits are very much possible areas to cut costs.

          It will be too late to complain when the group makes the unilateral decision to cut out suite upgrades and other member benefits.And i am telling you that in order to avoid such a thing, that members should send a firm complaint to one of the spg reps and tell them to stop their nonsense. And it has to be now. Complaints speak louder than compliments.

          starwood has certainly demonstrated they are willing to defend their brand but it should not be at the expense of customers or other stakeholders. I am talking about the group making unnecessary expenses such as expensive lawsuits and associated research costs. hilton has further issued a press release they have halted developments of the contentious brand.

          i wonder how is it selfish of me when i am thinking of not only myself but the general consumer and other stakeholders.

          The formula mentioned on fraud and potential losses are merely probabilities and any financial analyst will tell you that its not possible to guarantee 100% accuracy on such figures.
          Your whole arguement is based on one small element of the decision making process that the SPG managers will have to go through. Yes they will look at current years profit forecast (unfortunately most corporate bonus schemes reward short term profit far too much). However any decent accountant should be able to get the costs of the legal case capitalised and amortised over a number of years arguing the matching principle, therefore the impact on current year profits would be negligable.

          They are going to be doing a full risk analysis on the costs and the benefits of taking the case to court. For a major legal case the impact can be over several years.

          Your comment on the fraud equation I mentioned highlights the single dimsionality of your thinking on this. The equation is not a numerical equation,it is a management equation. Management is about judgement calls, it is about getting the critical information weighing up the options judging the different risks and making a decision. There is never a numerical formula that gives you the right management decision.

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          • #20
            Originally posted by trekkie View Post
            It is very much about money for starwood. If they decide to go through with the legal action, they are pursuing either monetary damages or injunctions in part due to estoppel theory.

            What you are advocating is that management should be entitled to carry out the legal suit at the expense of customers and other stakeholders.

            You are simply not considering the long term consequences. Your statements on losing customer loyalthy is largely a macro issue and difficult to quantify. Customers leave a brand for various reasons.

            I remind you that the group earnings release last quarter was 4.7% loss and their operational management revenue is expected to remain flat or even decrease for rest of the year. the statement indicated they are looking to increase the figure. If a huge expense has to be spent on this issue and operations revenue cannot be raised by much, the only way the group can adjust is by cost cutting and loyalthy member benefits are very much possible areas to cut costs.

            It will be too late to complain when the group makes the unilateral decision to cut out suite upgrades and other member benefits.And i am telling you that in order to avoid such a thing, that members should send a firm complaint to one of the spg reps and tell them to stop their nonsense. And it has to be now. Complaints speak louder than compliments.

            starwood has certainly demonstrated they are willing to defend their brand but it should not be at the expense of customers or other stakeholders. I am talking about the group making unnecessary expenses such as expensive lawsuits and associated research costs. hilton has further issued a press release they have halted developments of the contentious brand.

            i wonder how is it selfish of me when i am thinking of not only myself but the general consumer and other stakeholders.

            The formula mentioned on fraud and potential losses are merely probabilities and any financial analyst will tell you that its not possible to guarantee 100% accuracy on such figures.
            i can tell you have a very rudimentary understanding of the law. what you fail to understand is that SPG almost certainly has a team of in-house lawyers. these lawyers are on the SPG payroll and are making money whether they work 10 hours in a week, or 100. they are there specifically for instances like this. therefore, they can accomplish most of the legwork until this case goes to trial. they therefore are not expending any additional money on legal fees. the cost of having these lawyers on the payroll is already a REALIZED COST. if the case does go to trial, at that point, they can bring in a Skadden, or a Wachtell, or Simpson Thacher to take over, and handle the litigation strategy. however, much of the legal work will be accomplished at the in-house level, at no additional cost to SPG. Furthermore, just by an aggressive legal strategy, you could easily get Hilton to "flinch first"- especially if they fear the Justice Department might step in- not unheard of in this instance. if there are one or more "smoking guns," Hilton may very well be afraid of going to trial for fear of what might be revealed. However, to say that SPG's actions are at the expense of customers and shareholders is not true. if anything, it is to the benefit of shareholders. if i was a part-owner in a company and i saw a rival knowingly and intentionally steal trade secrets of our company, and watched the BOD sit back idly and do nothing, i would wage a proxy battle because that is certainly not the type of strong leadership and corporate governance i would expect from a board of directors.

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            • #21
              Originally posted by trekkie View Post
              I remind you that the group earnings release last quarter was 4.7% loss and their operational management revenue is expected to remain flat or even decrease for rest of the year. the statement indicated they are looking to increase the figure. If a huge expense has to be spent on this issue and operations revenue cannot be raised by much, the only way the group can adjust is by cost cutting and loyalthy member benefits are very much possible areas to cut costs.

              It will be too late to complain when the group makes the unilateral decision to cut out suite upgrades and other member benefits.And i am telling you that in order to avoid such a thing, that members should send a firm complaint to one of the spg reps and tell them to stop their nonsense. And it has to be now. Complaints speak louder than compliments.
              your obsession with the whole suite upgrades for plats is also terribly flawed. companies make the decision to slash member benefits all the time- irrespective of how their bottom line is performing. one need look no further than our very own SQ. they were making money hand over fist when they decided to gouge the PPS program. so i really don't see how that argument carries much weight either. thank you, come again!

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              • #22
                What does SPG have to do with the lawsuit between Starwood & Hilton?

                As far as I was aware the Starwood Preferred Guest program a.k.a SPG has little to zero involvement in this lawsuit...


                Sorry, but its just been bugging me this whole time

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                • #23
                  trekkie has not once mentioned the possibility that Starwood could emerge from this victorious.

                  He is very close to getting me to use the "Ignore POSTER" feature as his noise has ZERO value to this board.
                  HUGE AL

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                  • #24
                    "Complaints speak louder than compliments."

                    Speaking as a person working in the industry, in the long term I would absolutely disagree with this.

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                    • #25
                      hmm. Given the brave new world we live in, I think any general counsel worth their salt (Starwood and Hilton's included) would instruct counsel on a capped fees package, and with the instruction to seek to settle at the earliest opportunity, regardless of litigation merit.

                      Not everything has to be a million dollar lawsuit. Those days are over (sadly for us lawyers but better for the world). In any case, any litigant with any idea of how to run a business would have purchased legal costs insurance of some sort.

                      Anyway, (and I defer to US Attorneys on this), at least a portion of costs are usually awarded to the successful party. In a well considered lawsuit, you will rarely end up out-of-pocket at the end if judgment is given in your favour.

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                      • #26
                        http://industry.bnet.com/travel/1000...sing-and-more/

                        U.S. District Court places temporary injunction on Hilton’s Denizen brand — Judge Stephen C. Robinson, U.S. District judge for the Southern District of New York, placed a preliminary injunction on any further work on the Hilton Hotels Corp.’s Denizen brand and using any of Starwood Hotels & Resorts Worldwide, Inc.’s documents or electronic information. Hilton was also ordered to return any Starwood documents or files in their possession. Two executives at Hilton, former Starwood employees Ross Klein and Amar Lalvani, are accused of stealing trade secrets from Starwood and using the information to develop Hilton’s luxury brand, Denizen. The injunction will expire in 90 days.
                        All opinions shared are my own, and are not necessarily those of my employer or any other organisation of which I'm affiliated to.

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