More details of Starwood’s lawsuit against Le Parker Meridien

Earlier in the week I posted about a lawsuit Starwood filed against Le Parker Meridien, whereby the owners apparently got more than a million dollars in fraudulent reimbursements from Starwood. At the time there weren’t many more details other than the New York Post article, though Loyalty Lobby found a copy of the lawsuit, which is an interesting read.

This seems to center around Starwood’s reimbursement of award stays. If a hotel is at least 95% full they’re compensated by Starwood at the average daily rate. If the hotel is less than 95% full they’re reimbursed at a set level. Apparently the difference between these amounts can be over $200 per night.

So the hotel allegedly falsified records whenever they got close to the 95% occupancy level in order to get the higher reimbursement from Starwood. They did this by making reservations under fake names. The way they did this is by allegedly booking “fake” comped travel agent stays (referred to as FAMs, or familiarization trips). Hotels only usually book comped travel agent stays during periods of low occupancy, so it was suspicious when they did this during a period of high occupancy. What I find equally interesting is that Starwood apparently seems to count these comped stays towards the 95% occupancy level. So in a way they are incentivizing hotels to offer comped travel agent stays during periods of high occupancy. But that’s besides the point here, since they weren’t even offering travel agents comped stays, but were rather just making them up.

From reading the lawsuit it’s amazing just how many employees knew about the lot, and how they were told never to refer to it in emails.