Starwood Sues Hilton for Espionage

NEW YORK CITY-Starwood on Thursday filed a corporate espionage lawsuit against Hilton Hotels Corp. and two former Starwood executives over trade secrets for Starwood’s W hotels. The suit, filed in US District Court for the Southern District in Manhattan, charges that the executives stole proprietary information which was then used to develop Hilton’s Denizen brand. Hilton says the suit has no merit.

Starwood’s lawsuit alleges that Ross Klein, global head of Hilton luxury and lifestyle brands, and Amar Lalvani, global head of Hilton lifestyle and luxury brand development, stole more than 100,000 electronic and hard-copy files from Starwood after Hilton recruited the two executives. Klein and Lalvani had been senior executives with Starwood’s luxury brands group before joining Hilton in June 2008, following the Blackstone Group’s $26-billion buyout of Hilton in October 2007.

The confidential files thus passed along to Hilton–which included strategic development plans, term sheets and playbooks on converting a standard hotel into a luxury property–were used to accelerate its entry into the lifestyle hotel market, the Starwood complaint alleges. “This brand-in-a-box information provides Hilton with the means to bring a competitive hotel chain to market expeditiously and without expending tens of millions of dollars and years of development, thereby avoiding the inevitable and costly trial and error along the way,” according to the complaint.