Sunday, June 6, 2010

Hotel wars: Drama and Corporate Espionage

After a force behind the W chain defected to Hilton, a lawsuit exposes a side of the industry rife with claims of corporate espionage, double-dealing and poaching of top performers.

When Ross Klein arrived at Hilton Worldwide's Beverly Hills headquarters to create a new luxury chain, he was the "it" guy in the hottest segment of the lodging business.

A former retail marketing whiz, Klein had trained his fashion sense on the buttoned-down hotel industry, helping turn the W chain into a hip money-maker for its parent, Starwood Hotels and Resorts Worldwide Inc. Hilton lacked a product to compete. So it lured Klein away from Starwood in 2008 by offering him a chance to build a brand from scratch.

Klein delivered, quickly cooking up Denizen, a funky, sophisticated hotel concept. At a lavish launch party last year in Berlin featuring scantily clad dancers and an opera singer, Hilton Chief Executive Christopher Nassetta hailed Klein as a "creative genius." But to hear his ex-employer tell it, Klein is a copycat and a thief. Starwood claims he carried off thousands of pages' worth of documents filled with the company's trade secrets and shared them with Hilton management, according to a civil lawsuit it filed last year in U.S. District Court in New York. Now federal prosecutors are looking into filing criminal charges against Klein and others that include conspiracy, computer fraud and theft.


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