Starwood Fights Hilton Over Zen

Late Thursday, Starwood Hotels & Resorts filed suit against Hilton Hotels Corp. claiming a couple of former Starwood executives who left to work for Hilton stole proprietary information that helped them create a new luxury hotel brand for Hilton.

The dispute between two of the biggest hotel players centers around Hilton's plans to create a global chain of hotels called Denizen, a high-end product geared to both leisure and business travelers with a hip edge that emphasizes relaxation. According to Starwood's lawsuit, former execs Ross Klein and Amar Lalvani stole thousands of documents containing the company's hotel secrets.

Among those nuggets: A feature of the upcoming Denizen hotels is a "den of zen." But Starwood had planned on implementing a "zen den" at its W Hotels chain, and the lawsuit alleges that Klein and Lalvani stole the idea.

Starwood found out about the documents after it sought to stop Klein and Lalvani from bringing more of its employees to the Hilton side.

According to the Wall Street Journal's coverage of the suit:

In its lawsuit, Starwood is demanding that Hilton "destroy all documents and information relating to the promotion and rollout of the Denizen brand, which would require Hilton to start over." That could be enough to kill the new brand.

Starwood says Messrs. Klein and Lalvani took its "brand in a box" -- or the "blueprints" for launching a new hotel brand. Those blueprints set out how to negotiate with developers, train employees and market the brand, the lawsuit says.

It also says the two men stole strategic development plans, marketing and demographic studies and training materials for the hotel company's entire luxury-brand line, including the W Hotels and St. Regis brands.

The complaint also alleges that the former executives stole the names and contract details of hundreds of property owners who signed hotel-management contracts with Starwood.

But the biggest heist may have been Hilton's hiring of Klein and Lalvani in the first place. By poaching talent from its rival, Hilton succeeded in compiling what real estate analysts told Conde Nast Portfolio was a "lodging dream team." Even if Klein and Levine hadn't stolen the documents, as Starwood alleges, it's not inconveivable that they would have spoken up during a meeting about the Denizen brand: "hey, how about creating a place in the hotel where guests can get some, you know, zen?"

Still, the suit is likely to be a distraction for Hilton's new owners, the Blackstone Group. Last year, Blackstone paid paid $26 billion for the Hilton empire and then had to confront a global travel slowdown caused by the recession.