Hilton heads for I-Drive
Orlando Business Journal - by Alex Finkelstein Staff Writer
ORLANDO -- After months of hedging, Hilton Hotels Corp. has reluctantly disclosed plans to build the "Convention Center Hilton," a $100 million hotel immediately adjacent to the Orange County Convention Center.
But competitor Tishman Realty Corp. isn't rolling out the welcome mat.
It's rolling out the lawyers.
Tishman, one of the country's biggest convention hotel developers, is steamed because the new Hilton venture appears to compete head-on with Tishman's 800-room Lake Buena Vista Hilton.
Now, both industry giants have filed back-to-back breach of contract lawsuits against each other before separate Orange Circuit Court judges.
Tishman wants Judge William C. Gridley to immediately bar any Hilton hotel construction plans.
Hilton, meanwhile, is asking Judge Lawrence R. Kirkwood to rule on its 17-year-old non-compete contract with Tishman.
The dispute was ignited when New York-based Tishman first read of Hilton's plans in a recent column item written by Orlando Business Journal tourism reporter Alan Byrd.
Citing unnamed sources, the three-paragraph item referenced plans by Hilton to buy a 26-acre tract abutting the planned expansion of the Orange County Convention center.
That raised questions about a longtime deal struck between Tishman and Hilton, which has managed Tishman's Hilton in Lake Buena Vista since 1982.
That management contract clamps a number of restrictions on where Hilton can build new local hotels. For example, Hilton is barred from building a new property within a 15-mile radius of the Disney property without Tishman's permission.
After reading the item, John A. Griswold, Tishman's president and one of the most prominent names in the hotel development industry, fired off a "Dear Sam" letter to Samir A. Shafei, managing director of the Disney Hilton. Expressing surprise at the newspaper article, Griswold wrote, "Hopefully, this is mere speculation or rumor."
And, in fact, in a "Dear John" letter to Griswold dated June 29, Hilton denied the planned venture.
"As you can appreciate, Hilton is always looking at business opportunities," wrote Dieter Huckestein, president of Hilton's hotel division in Beverly Hills, Calif. "We have made no decisions as of yet regarding other opportunities, if any, we may pursue in the Orlando area."
Just two weeks later, however, Hilton lawyers were in Orlando federal court, asking that a judge rule on the validity of the Tishman-Hilton contract.
The case has since been withdrawn and refiled in Orange County Circuit Civil Court --where Tishman has filed its own legal action, seeking to quash the planned convention hotel.
According to court records and preliminary conceptual drawings obtained by OBJ, the hotel will be located directly behind the planned expansion of the Orange County Convention center. Overhead pedestrian walkways will link the two facilities.
Roughly 50,000 square feet will be set aside for meeting and exhibition space, and the hotel will offer about 1,000 rooms.
That set of numbers -- and the adjacency to the convention center -- may be critical to the pending legal shootout.
Hilton argues that it is free to build the hotel without Tishman's approval because a clause in the Hilton-Tishman contract allows them to do so, if the new hotel has more than 850 rooms or suites or offers more than 50,000 square feet of banquet and meeting space.
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