The owners of the Shelbourne Hotel believe it is being “seriously mismanaged” by an arm of the Marriott international hotel group and want to terminate the management agreement, the Commercial Court has heard.
The owners claim the level of alleged mismanagement identified to date, if it remains uncorrected, will tarnish the hotel's reputation and iconic status, the court was told.
Pening the outcome of the procedure to terminate the management agreement of August 2006, the owners - Shelbourne Hotel Holdings Ltd (SHHL), who acquired the landmark five-star Dublin hotel in 2004 - want a court order allowing them access to the books and records of the hotel kept by Torriam Hotel Operating Co Ltd, a company within the Marriott group.
SHHL claims its auditors have identified a "systemic breakdown" in the financial controls at the hotel due to "serious mismamanagment" by Torriam resulting in alleged significant direct financial loss to them. SHHL wants to terminate its agreement with Torriam and says it is not interested in Torriam's offer of €1.2 million to them in an effort to resolve the dispute.
Today, Brian O'Moore SC for SHHL, said his clients had spent €125 million on refurbishing the hotel alone, excluding the cost of purchase, and were seriously concerned about the management of the hotel. Among the matters of concern were that the hotel's Finance Director resigned in June 2008 and was replaced by a Marriott "task force".
Torriam denies any default of agreement has occurred justifying termination of the management agreement and it wants a stay on the SHHL application for access to the books and records so the dispute may be referred to arbitration under the management
agreement.
Mr Justice Peter Kelly admitted the proceedings to the Commerical Court and directed the application for a stay be heard on December 2nd in tandem with SHHL's application for access to the hotel's books and records.
