The legal skirmish between Fairmont Hotels & Resorts and the owners of two Acapulco hotels took another turn last week. That’s when Fairmont asked a federal judge in New York to confirm a $15 million arbitration award against the owners.
The dispute centers around management contracts between Fairmont (part of the French Accor SA group) and the hotels’ previous owners.
Here’s some background, as laid out in the court documents:
Farimont ran the Acapulco Princess hotel and the Pierre Marques hotel next door since the late 1990s.
In the spring of 2015, the hotels were sold to two companies, Organización Ideal S de RL de CV and Impulsora de Revolcadero S de RL de CV.
The new owners (who wanted a different management company) tried to buy Fairmont out of the existing management contract. Under its terms, Fairmont had the option to extend the agreement through 2050.
In September of 2015, Ideal and Impulsora terminated the contract after attempts to renegotiate failed. Ten days later, armed guards escorted Fairmont personnel out of the properties. The same day, the new owners filed suit in New York state court, asking for a determination that their actions were valid. The case was removed to federal court, and the arbitration ensued.
Fairmont asked the arbitration judge for lost profits it would have made through 2050. The new owners counterclaimed on grounds that Fairmont had mismanaged the properties.
The arbitrator mostly agreed with Fairmont in making the $15 million award. It did, however, refuse to grant Fairmont’s claim that the damages be trebled.
The former Acapulco Princess and Pierre Marques now operate as Princess Mundo Imperial Riviera Diamante Acapulco and Pierre Mundo Imperial, respectively. Average TripAdvisor ratings of 3.5-4 stars for the Princess Mundo and the Pierre Mundo indicate that there’s room for improvement by the new owners. (To be fair, the reviews were generally the same under Fairmont management.)
A master plan announced last year promises to breathe some new life into the properties.
In the works is a $50 million remodeling of both hotels. The Princess will undergo a renovation of its façade, restaurants, bars, public areas, pools and infrastructure. Additionally, more than a thousand rooms will be redesigned and the spa will be transformed.
At Pierre Mundo, a tower remodel will feature 85 deluxe rooms and 15 suites with ocean views.