A battle between two hotel heavyweights is playing out in the heart of Times Square, putting management of a 208-room property at stake, along with the jobs of more than two dozen unionized workers.
Highgate Hotels is suing to block OYO Hotels from terminating its contract to run the OYO Times Square at 157 West 47th Street, Crain’s reported. The Manhattan-based operator says OYO blindsided it with an Aug. 1 notice canceling the deal, four years before its scheduled end, citing issues tied to an entirely different property.
Highgate called the move “bizarre” and warned it would violate state law requiring 90 days’ notice for mass layoffs.
At issue is a 10-year management agreement that entitles Highgate to a 3.25 percent cut of the hotel’s gross revenue. OYO, for its part, is supposed to provide working capital to the property, which Highgate describes as “well-performing.”
The operator says the hotel’s unionized staff, employed under a collective bargaining agreement, would be illegally displaced under OYO’s termination order.
Highgate’s lawsuit argues losing the Times Square assignment would cause “irreparable harm” to its reputation and workforce, and that OYO has threatened further legal action if it doesn’t vacate the hotel by Oct. 1.
An attorney for Highgate declined to comment to the publication, while OYO did not return requests for comment.
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, while OYO, backed by SoftBank, bought Motel 6 from Blackstone last year for $525 million and is reportedly prepping an $800 million initial public offering.
This year, Alex Sapir replaced Highgate with Crescent Hotel Management to operate the NoMo Soho hotel. Critically, Crescent charged a 1.5 percent management fee in the first year compared to Highgate’s 3 percent.
— Holden Walter-Warner
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