Is the Trump Hotels brand leaving Panama? Reports say the Trump International Hotel and Tower Panama's owners’ association would like it to, but the hotel’s management team isn’t going without a fight.
Those with an ownership stake in the hotel voted to remove the Trump name and management from the property following what one investor called “gross mismanagement, breaches of contract, conversion (or the misuse of property for someone else’s gain) and breaches of fiduciary duties.”
The aforementioned owners’ association filed a $15-million arbitration claim, prompting Trump Hotels to respond with a $200-million counterclaim and a refusal to hand over financial records. Trump Hotels has also accused Ithaca Capital Partners, the majority owner with 202 of the hotel's 369 condo-hotel units in its portfolio, of illegally terminating its contract, as well as deceiving fellow hotel owners.
“Our investment has no future so long as the hotel is managed by an incompetent operator whose brand has been tarnished beyond repair,” Orestes Fintiklis, the managing partner of Miami-based Ithaca Capital Partners, wrote in a letter to fellow owners. He also wrote that Trump Hotels “is refusing to maintain its last shreds of dignity and peacefully vacate our property.”
A Trump representative, however, put a different spin on the events.
“Unfortunately, it is YOU, the unit owners, who will ultimately be the ones to bear responsibility for the bad acts of Mr. Fintiklis and his cohorts,” Jeff Wagoner, EVP of Trump Hotels, said in a letter to the owners last week.
Trump hotels in New York and Toronto have quietly reached deals to separate themselves from Trump’s brand. But a dispute in Panama is shaping up as a brawl: https://t.co/KvQMHoIUtM— AP Politics (@AP_Politics) January 16, 2018
The situation came to a head last month, when a team from Marriott International visited the hotel at the behest of its majority owner, only to allegedly be turned away by the hotel’s staff.
This account comes from two anonymous sources who claim not to be authorized to speak about the clandestine dealings circling the property. These anonymous sources also told the Associated Press that Trump Hotels CEO Eric Danziger called Marriott CEO Arne Sorenson to complain about the incident.
At the time of this writing, neither Trump Hotels nor Marriott have responded to emails from Hotel Management regarding the visit.
However, Alan Garten, general counsel for the Trump Organization, told the Associated Press that the call between Danziger and Sorenson was not intended to be hostile.
“We have a relationship with Marriott," Garten said in a statement. "They were appreciative that we let them know that we have a valid contract."
Garden clarified that he believed Marriott was unaware of the circumstances surrounding the hotel prior to the visit. The main concern raised by this spat between the management company and hotel ownership is whether or not it is possible to go toe-to-toe with a company owned by the president of the U.S. This concern circles back to President Trump’s refusal to divest himself from his businesses prior to being sworn in. Larry Noble, head of the Campaign Legal Center, a Washington-based public interest group that studies issues surrounding democracy, told the AP that hotels are in a sticky situation.
“I don’t know if they've got a valid contract or not,” Noble said in a statement. “But if you're a big company, you'd really have to think twice before getting into a fight with one of the president's companies.”
Whether or not the owners are able to oust the Trump name from the property remains to be seen, but their effort to do so began last year after Ithaca Capital Group bought the 202 condo-hotel units from the building’s developer. The hotel was completed in 2011, but since then it has struggled to sell units and fill guestrooms, and the property is bringing in occupancy of around 26 percent to 28 percent during what is considered the peak season for the hotel. As a result, Ithaca and other owners voted in November to oust the Trump’s directors.
One owner, Al Monstavicius, told the Associated Press that Ithaca wished to remove the Trump name quietly. “That didn’t work,” he said.
Trump's hotels have been rebranding as of late, with the former Trump SoHo reopening as The Dominick at the tail end of 2017. Furthermore, if the Panama hotel’s ownership continues to press to have Trump removed from the property, they have some history to draw from. In 2015, the owners of multiple apartments in the same building as the Trump International Hotel and Tower Panama voted to remove Trump’s management company over budget issues and claims of misspent funds. Following this, the property’s finances have improved, with its deficits switching from an excess of $1 million to a surplus.
However, Trump Hotels’ February 2017 agreement with Ithaca Capital Partners includes a stipulation that Ithaca not act “in any manner averse to the interest of Trump Hotels.” Fintiklis acknowledged this part of the contract in his letter, but claimed mismanagement and misconduct by Trump Hotels renders it invalid.