Unionized workers at the OYO Times Square received a temporary reprieve, but the fight over the building’s future still rages on.
A Manhattan judge blocked the firing of more than 25 unionized workers at the hotel at 157 West 47th Street, Crain’s reported. Landlord OYO Hotels broke state law by failing to provide the required 90-day notice before the mass terminations, according to the judge.
“That’s completely outrageous, actually, to terminate the employees without the notice to which they are entitled,” New York County Supreme Court Judge Andrea Masley said, extending a temporary order.
The saga dates back to the beginning of August, when OYO allegedly blindsided property manager Highgate Hotels with a notice canceling its contract, according to a lawsuit filed by Highgate.
The cancellation attempt came four years ahead of schedule and included the citation of issues related to an entirely different property Highgate operates.
The issue centers on a 10-year management agreement entitling Highgate to a 3.25 percent cut of the 208-key hotel’s gross revenue. OYO is supposed to provide working capital to the property, which Highgate describes as “well-performing.” OYO begged to differ on Highgate’s performance in the termination notice. The hotel owner said it now plans to welcome a new, unnamed property manager.
The fight pits one of New York’s biggest management companies against one of the world’s fastest-growing hotel owners. Highgate controls more than 30 New York hotels and 500 globally. OYO, backed by SoftBank, bought Motel 6 from Blackstone last year for $525 million and is preparing an initial public offering that could value the company at $8 billion.
The effort to terminate Highgate’s contract could be a means for OYO to cut expenses and boost earnings before the IPO.
The judge issued an ominous warning to lawyers from both parties.
“Eventually you’re going to break up. So figure out a way to do it pleasantly and expeditiously or I’ll find a way to do it.”
— Holden Walter-Warner
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