(NewsNation) — Marriott International has sued one of its New York-based franchises for $2.6 million, claiming the branch breached its contract by turning its property into a shelter for migrants without approval from the company.
The company brought suit last week against Pride Hotel LLC, which contracted with Marriott to operate a dual-branded Aloft and Element1 hotel property in Jamaica, New York, according to the federal suit filed last week.
But months before the hotel was slated to open, Pride Hotel instead entered into a “lucrative government contract to provide shelter to migrants and asylum seekers” breaching its franchise agreement, the suit stated.
The complaint stated Pride Hotel’s owners contracted with the city of New York without first obtaining Marriott’s prior consent, as required by the franchise agreement.
Marriott International also alleged that Pride Hotel failed to properly “de-identify” by not removing signs and brandings or paying franchise fees, further violating their agreement.
The company said it gave the franchise owners an option for “compromise” before Marriott would consider allowing migrants into the hotel if they met certain requirements, such as entering into a temporary housing facility consent agreement with Marriott and updating its occupancy certificate.
But the franchise owners did not respond to Marriott’s numerous attempts to get in contact over months, the lawsuit alleges.
The complaint says Pride Hotel’s move caused “significant harm” to Marriott as it would be difficult for the company to find other properties in a highly saturated location.
“I’m sure the franchise agreement is written to allow the franchisor to control the way the hotel is used and the franchisor could reasonably object to having its trademark be associated with a facility housing migrants,” Stanley M. Dub, an adjunct professor at Case Western Reserve University Law School who teaches franchise law, told NewsNation in an email.
“A franchisee should not have the right to use the franchisor’s trademark in connection with such activities without the franchisor’s consent. So I’d guess the franchisor has a good case.”
Heath Olnowich, an attorney for Pride Hotel, told NewsNation the owners declined to comment.
Marriott International did not return a request for comment by NewsNation.
More than 200,000 migrants have come to New York City since 2022 and the shelter system currently houses about 65,000.
The city has struggled to keep up with the influx which has caused a severe strain on its housing infrastructure and tensions among residents.
In January, Mayor Eric Adams agreed to a $275 million contract with the Hotel Association of New York City to house thousands of migrants. About a fifth of the hotels in the city are sheltering migrant seekers and participating hotels are paid up to $185 a night per room, The New York Times reported in May.
Not a single hotel contracting under the city’s shelter program has converted back into a traditional hotel at the time of the outlet’s reporting.
Last year, the city spent $1.45 billion to help migrants, with much of the cost going toward providing shelter, food and services, according to the city.
The Associated Press contributed to this story.