The Marriott hotel brand has been under fire repeatedly for the last few years, dealing with multiple legal issues worldwide. One of the most common issues that have led to Marriott having criminal investigations opened against it is potential fraudulent behavior.
Marriott Hotels Accused of Engaging In Vendor Kickbacks & Scaming a Hotel in Poland
In most of these cases, the Marriott brand allegedly runs some scheme to take money away from its business partners (mostly hotel owners), with the brand being the ultimate beneficiary. There are recorded instances of Marriott engaging in this behavior going back decades. Here are some of the more recent issues that the brand has gotten into.
Marriott Criminal Investigation in Poland
There’s an ongoing criminal investigation involving the Marriott brand in Poland. LIM, the owner of the building where a Marriott hotel is located in Warsaw, accused the company of financial embezzlement. The main issue in this case is that LIM claims Marriott was using LIM’s funds to pay its subsidiaries.
According to the Polish company, it was financing the Marriott hotel throughout the entirety of the 2020 lockdown days. Hotels remained open throughout that time because they were deemed essential businesses. However, the hotel in Warsaw was not making ends meet at 30% capacity or less.
LIM was reportedly picking up the bills for Marriott during this time. Despite this good gesture from the owner of the building, the hotel chain proceeded to mishandle the funds. Using the funds provided by LIM to pay its own subsidiaries.
The complaint, currently in the hands of the local District Attorney’s Office in Warsaw, also states Marriott prevented LIM from recuperating some of the COVID losses. LIM claims it secured a contract to place a large billboard on the Marriott hotel building. The hotel chain refused to have the billboard placed, forcing LIM to lose out on potential revenue.
While this is not necessarily an instance in which Marriott engaged in vendor kickbacks, it is the latest issue the company is involved in. The incident shows that Marriott is willing to go against the interests of business partners. Is the trouble worth slapping Marriott branding on a hotel for better occupancy rates?
Hong Kong-Based Company Sued Marriott for Engaging in Vendor Kickbacks
One of the first Marriott criminal investigations of the new millennium precisely looked into vendor kickbacks. In 2002, Marriott was sued by Hong Kong-based CTF Hotel Holdings Inc. CTF accused Marriott of forcing its hotel owners to hire a specific company that provided audio-visual services.
The Molly Corp company would invoice hotel owners up to three times the cost of their regular service fees. With Marriott and its subsidiary Avendra pocketing the excess costs that hotel owners paid. Before CTF went public with their lawsuit, Marriott tried to downplay the situation by reimbursing them for the services provided by Molly Corp.
Marriotts’ defense at the time argued that none of the transactions that took place were made without CTF’s knowledge. The corporate giant did not elaborate on whether or not the markup of the prices was deliberate.
At the time, the reimbursement was seen as a form of hush money payment. What Marriott was trying to avoid was having this information going public. That would lead to other hotel owners questioning Marriott’s business practices.
The current case in Poland proves that Marriott is seemingly not a brand that’s afraid to get its hands dirty. Some of the sketchy business practices it was involved in at the start of the century continue to this day.
Hotel Owners Being Sold Short for Nights Paid Through the Loyalty Program
Some unfortunate hotel owners found themselves in business with Marriott unwillingly when the corporate giant bought Starwood Hotels. Starwood Hotels was the corporation that owned popular hotel chains like the Sheraton brand and the St. Regis trademark. The company was sold to Marriott in 2016.
That meant hotel owners who had been in business with Starwood would now have to work things out with Marriott. The merger was completed in 2018, and that’s when an owner of a hotel in Thailand started to see the downside of working with Marriott hotels.
Minor International, a company that owns various hotels in Thailand, claimed that having nights at their hotels booked through the Marriott reward program was not beneficial to their business. When a guest pays for a night at a Marriott hotel with points from the Marriott Bonvoy reward program, the Marriott corporation still has to pay the nightly rate to the hotel.
According to the lawsuit filed by Minor International, Marriott would pay 60% less than the average nightly rate to the hotel for those nights that guests paid with points. When the average nightly rate at these Thailand-based hotels was around 120 dollars, Marriott only paid 47. Minor claimed those were not the agreements it had previously made with Starwood.
In this situation, the charges against Marriott were again not directly vendor kickback claims. Unfortunately for hotel owners, this was another case of Marriott finding ways not to pay them the money they rightfully owned. What makes this situation potentially worse than some of the other cases is that these people did not willingly enter into business with Marriott.
Even though there’s technically only one case in which Marriott allegedly engaged in vendor kickbacks, the other situations also present concerning practices. The issue in Poland highlights a very concerning issue where Marriott is shown to leave business partners without pay.
One of the major benefits that hotels obtain from aligning themselves with these large brands is access to their large client base through the loyalty program. When the nights paid through the program aren’t paid accordingly to the hotel, it breaks the main benefit of the agreement.
At the same time, this loyalty program issue shows a willingness by Marriott to sell its business partners short. The brand is said to still operate according to a “moral code” set by founder J.W. Marriott when the hotel chain was still a family business. These cases seem to prove that the code isn’t too relevant in the brand’s current corporate offices.