Awkward Moments Ahead For Starwood, Hilton Executives

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Just last month, some bloggers were speculating that Hilton and Starwood were about to reach a settlement in the nasty corporate spying lawsuit that first blossomed last April. Instead, earlier this month the situation got even nastier as Starwood amended its filing to accuse 44 of Hilton's top executives of being involved in the plot or having knowledge of it.

In the original suit, Starwood claimed two of its former executives—Ross Klein and Amar Lalvani—went to work for Hilton and took with them proprietary company information they used to develop Hilton's Denizen brand. Once the alleged plot was uncovered, Klein and Lalvani left the company and Hilton halted work on Denizen, a new brand that was aimed directly at the upscale lifestyle segment pioneered by Starwood's W chain.

Most damning in the updated filing is the charge that Hilton CEO Chris Nassetta and former development chief Steve Goldman knew of the corporate espionage and did nothing to stop it. Goldman left Hilton last year without comment from the company. The suit also alleges that Hilton has used Starwood's purloined “secret sauce” as it develops other high-end brands, including the Waldorf-Astoria Collection, Prestige Portfolio and Conrad.

Suits are never fun and generally only serve to make lawyers happy and rich. The timing of this additional filing seems particularly awkward given that most of the industry elite, including top officials from Hilton and Starwood, will gather in San Diego next week for the ALIS Conference. Scanning the program brochure, I see Nassetta and Starwood chief Frits van Paaschen aren't scheduled to be on any panel discussions together. But you've got to imagine they'll run into each other in the hallways or lounges of the Hilton Bayfront. I hope, by some chance, I'm there when it happens to listen to their exchange of pleasantries.

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