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Starwood found guilty of breach of contract with Asia Hhtel investments

The High Court of Singapore has handed down a guilty verdict against Starwood Asia Pacific Management Pte Ltd , a subsidiary of…

The High Court of Singapore has handed down a guilty verdict against Starwood Asia Pacific Management Pte Ltd , a subsidiary of Starwood Hotels & Resorts Worldwide Inc, for breach of a non-circumvention agreement on a Bangkok hotel with Asia Hotel Investments.

The breach was with regards to an agreement signed between Asia Hotel Investments and Starwood in connection with Asia Hotel`s proposed purchase of a majority stake in Grand Pacific Hotel in Bangkok, now known as Westin Grande Sukhumvit.

Asia Hotel had signed an agreement to purchase the hotel and have it managed by Starwood. Under the terms of this confidentiality and non circumvention agreement, Starwood bound itself for a period of 12 months not to deal with or enter into any management contract with owners of the hotel.

The agreement was set to expire on November 9, 2002. However, on May 15, 2002, Starwood circumvented Asia Hotel and signed a management agreement clearly in breach of its existing agreement with Asia Hotel.

Gary Murray, President of Asia Hotel said: We are happy that the court has ruled in favour of Asia Hotel and found Starwood guilty. Taking Starwood to court was a last resort for us and the first time that we have been driven to do so with a hotel management partner.

In fact, we have an excellent relationship with all our partners which includes Hilton International and other international operators. We had hoped to develop similar win-win situations with Starwood that would be long term and mutually beneficial, reports Gary Murray, President of Asia Hotel. As a hotel investor we take risks everyday. Our business is based on having trust and confidence in our potential partners. We had never expected that it would turn out this way especially with a large international and public-listed company like Starwood. It has been very disappointing.

On the award of S$10 by the Court as damages to Asia Hotel, Mr Murray said: Seeking damages was not our sole motivation for taking Starwood to Court. We wanted to prove that Starwood had breached its confidentiality and non-circumvention agreement with us, and this, we have emphatically accomplished. Despite the defences put up by Starwood, the Court has found Starwood to be clearly in breach. We also wanted to send a clear message that while we are a boutique company in the business of investing in hotels, resorts and golf course, we will not stand for being taken advantage of.

We are disappointed with the amount of damages awarded, and are currently in discussions with our lawyers on the possibility of an appeal for more damages.

Moving forward, Asia Hotel is focusing its attention on current developments and to expanding its hotel and resort business beyond Thailand to include the Philippines and other resort markets in South-east Asia. Its golf course business has also seen rapid growth and Asia Hotel expects to begin work on several large real estate leisure development projects around its Muang Kaew and Sriracha golf clubs soon, according to Mr Murray.

After a multi-million-dollar renovation in 2002/03, Thai Golfers Association has now rated Muang Kaew #1 in Bangkok and #2 in all of Thailand. The Sriracha Golf Club is currently being renovated and will be positioned as one of the top golf clubs in the Pattaya area. The firm is also developing a trendy chic New York style hotel in downtown Bangkok which is expected to open at the end of 2004.

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