• Goldman reunited with Sternlicht at Starwood

The appointment last week of Steve Goldman as CEO of Groupe du Louvre by Starwood Capital marks Goldman's return to the company where he spent more than a decade working with founder Barry Sternlicht.

It also marks the return to the luxury sector of one of the key players in the case brought by Sternlicht's other creation and a former employer of Goldman – Starwood Hotels & Resorts – against Hilton, over the aborted Denizen brand.

By the time Goldman was named as president of global development and real estate at Hilton, Sternlicht had left Starwood Hotels & Resorts. Goldman joined Chris Nassetta three months after Nassetta was named president and CEO and became Hilton's joint number two behind him, alongside Ian Carter, Hilton's newly-promoted president of global operations.

Goldman's tenure at Hilton was bought to a sudden standstill when, a month after the launch of Denizen Hotels the company was accused by Starwood Hotels of stealing trade secrets in an effort to replicate its W brand.

The group's lawsuit claimed that Hilton and two of its Starwood Hotels's former executives, by then at Hilton – Ross Klein and Amar Lalvani – had stolen "massive amounts of proprietary and highly confidential Starwood information".

The two were then said to have created Denizen, with a help of a slew of former Starwood Hotels employees, in time for a launch mere months after their appointments. Starwood Hotels's chief administrative officer and general counsel Kenneth Siegel was quoted at the time as saying: "The wholesale looting of proprietary Starwood information, including a step-by-step playbook for creating a lifestyle luxury hotel brand, unfairly enabled Hilton to launch a new brand in only nine months instead of the usual three to five years."

After the complaint was filed Goldman was reported to have been put on paid administrative leave alongside Klein and Lalvani, eventually leaving the company around September last year. Denizen was eventually put on hold, having never made it more than a couple of mood boards into the wider world. Starwood is now seeking to ensure that Hilton is unable to consider developing in the luxury and lifestyle segment again.

According to documents provided to the court by Starwood Hotels, one of Nassetta's first moves upon being hired at Hilton was to start recruiting Klein, then president of Starwood's luxury brands group. Goldman is thought to have been responsible for bringing over Lalvani, head of W's development, a month later.

Goldman was not named as a defendant in the civil suit, however, he plays a role in the support documents. Goldman is quoted in an email as saying to Lalvani: "Worst thing that happens, is they find out you are talking to me and pay you a s***load of money to stay and you owe me drinks for life".

Starwood Hotels claims that Goldman used Lalvani as a corporate spy before he joined Hilton providing information about developers, including one interested in opening a W branded hotel in Thailand. An email from Lalvani to Goldman, highlighted in the complaint, read: "Here's an interesting one. . . . I have good connections with the owner. Let's discuss protocol during my transition on deals like this so we don't miss them but also dealing with the fact we don't have a lifestyle offering yet. This is going to be fun!!"

The federal authorities are now investigating whether Hilton and its former executives should face criminal charges for stealing trade secrets and other intellectual property.

Accusations at the start of the year from Starwood Hotels detailed the involvement of 44 Hilton executives including five who were sitting on Hilton's executive committee, the two most senior of which were Nassetta and Goldman. It is estimated that, since the launch of Denizen, Hilton has fired, or placed on leave, about 30 members of its luxury brands group, many of them former Starwood Hotels employees.

Goldman and Nassetta have both been accused of knowing about and condoning the theft of more than 100,000 documents, although once again neither Nassetta nor Goldman was named as a defendant in the complaint.

Lawyers for Goldman have said that the new allegations were false, with the US attorney's office telling them that Goldman was not a subject or target of its investigation.

Speaking to Hotel Analyst last week, Starwood Hotels CEO Frits van Paasschen reaffirmed Starwood's commitment to protecting its intellectual property.

There seems to be no clear end in sight for the case between the two, with initial rumours that they would settle out of court superceded by the potential criminal case. In the meantime, Hilton is without a boutique brand and hotels which had been tipped to come under the Denizen flag – including The Trafalgar in London – have seen themselves remain under the wider Hilton label.

Starwood Hotels, meanwhile, has 37 hotels under its W brand, with a pipeline of 21 around the globe, just over 10 years after its first opening. If Starwood gets its way the only chance Hilton will have of getting into the sector is by paying the room rate alongside everyone else.

 

 

HA Perspective: The big question about the arrival of Goldman is how much of a strategy shift there will at Louvre and in which direction. The company could become a buyer or it could go into sell mode.

Goldman's experience at Starwood Hotels was of buying and building up the company. He went onto join Hyatt in 2003 and spent four years at that company where he had a similar focus, although perhaps not as radical as the 100 or so hotels he added at Starwood Hotels.

Where Goldman has little experience is in the economy and budget hotel segments, a part of the company in which Barry Sternlicht has never seemed particularly interested either. Dealing with this business, rather than the upscale Concorde, is probably the harder challenge.

Meanwhile, Goldman is no doubt relieved to draw a line under the squabbling between Starwood Hotels and Hilton. Back in June newswires reported that the two companies were in talks to settle.

At this time, it was suggested that if a settlement were reached, it would be announced within four to six weeks. As ever, this deadline has been breached without any news. And the federal prosecution similarly seems to have ground to a halt.

The two main defendants in the Starwood civil case, Amar Lalvani and Ross Klein, have, like Goldman, moved on. Lalvani now runs a travel consultancy business out of New York and Klein is an independent marketing consultant based in Los Angeles.

Hilton too would no doubt like to move on. Starwood Hotels, of course, is keen that it doesn't.

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