Embassy Suites, a Hilton Hotel franchisee in Kentucky, risks foreclosure, with its two major owners locked in a legal battle.
In a lawsuit filed earlier this month, developer Eric Bachelor asked a Jefferson County judge to remove his business partner, the AI J. Schneider Co. from its hotel management role.
Bachelor accused Schneider CEO Mary Moseley of running up inappropriate expenses on the Embassy Suites’ tab and diverting business to its other hotels, such as the Galt and Crowne Plaza, to the detriment of their joint hotel. Bachelor, a former Ford Motor Co. executive, owns a 60% stake in the Embassy Suites, while the remaining 40% belongs to Schneider.
The suit also claimed that the hotel is at risk of losing its Hilton Hotels franchise because Schneider hired a general manager who is not “Hilton certified”.
Furthermore, Bachelor claimed that the Embassy Suites is at risk of foreclosure by its construction lender because despite strong sales, the hotel has yet to ring in profits due to Schneider’s poor expense management.
However, Schneider said that the hotel is on track to meet its operational and financial targets and that Bachelor overstepped his duties by interfering with hotel management.
In an affidavit, Bachelor also claimed that Schneider rang up excessive expenses, exceeding full year lender project expenses by almost $2 million.
A US Bank analysis showed that the hotel is on track to generate only $2 million in net operating income for the fiscal year ended April 30, against its original projection of $4.5 million. Still, the analysis stated that the hotel portion of the project was on track to generate more revenue in its first 12 months of operations--$14 million against the $13 million projection. US bank is a project lender.
