hospitalitystyle.com

(May 2009) posted on Mon May 04, 2009 EDT

As these two corporate titans prepare to do legal battle, a look at what’s at stake for the hospitality industry.

By Mary Scoviak

When you think "corporate espionage," hospitality isn't the first industry that comes to mind. At least it wasn't until April 17, when Starwood Hotels & Resorts Worldwide filed suit against two former executives and Hilton Hotels Corp. alleging theft of trade secrets, computer fraud and unfair competition. Now, it's going to be up the courts to decide who owns intellectual capital and how that ownership determines factors from brand names to brand development.

It's not just corporate hotel companies that are going to be watching the court's mood. Designers who work for multiple brands have to sit up and take notice. Whatever the outcome, this case will intensify the need for the firms who create hotel architecture and interiors to make sure that sharing best practices doesn't verge on visual plagiarism. "Me too" has been out of vogue for years; but now, anything that smacks of being a knock-off will have clients running to another firm.

It also focuses attention on two of the industry's giants. With worries over the economy, the H1N1 virus and terrorism already threatening performance, can this headline litigation make a bad situation even worse? Or, will the public welcome a public contest in which neither player is in need of a bail-out?

Here's the thinking of some Hospitality Style advisory board members on this topic:

Tim Murphy, vice president marketing, Interbrand Design Forum: "This is quite an interesting case because it illuminates many of the key intangible elements of a brand that are carefully planned and orchestrated. W hotels are in the public domain, so anyone can stay at one of their locations and gather a certain amount of intelligence. What's at the crux of this lawsuit is the investment in building the brand and the insight and strategy that goes into it.

"While having the competition's playbook provides a huge advantage and could certainly accelerate an emerging brand's speed to market, it's a rocky foundation to build from. Every brand should have its own DNA and a strategy focused specifically on delivering its unique proposition to its target audience. It is commonplace to emulate industry convention, which is why there is parity in so many sectors.

"To bring long-term brand value, a company should go beyond industry table-stakes and strive for game-changing innovation. When you create something that is ownable to your brand, in many cases you can protect it from a legal standpoint. We've been able to help our clients get trademarks or patents on everything from a color to branded touch-points to their entire retail prototype."

David Stein, chairman, Stein Group International: "Until Hilton Hotels Corp. and the former Starwood executives admit guilt or are proven guilty, we need to try to withhold judgment, as hard as that might be. If they are guilty, then I think it's healthy for Starwood to bring this action. Again, if the allegations prove to be true, this kind of activity should be stopped. At least a lawsuit of this magnitude will have a chilling effect on some others considering-or already involved in-similar activities."

James Stapleton, vp/operations manager, FRCH: "This case doesn't say much about the hospitality industry nor the two good companies involved. It does say something about the ethics of those involved, but not the industry at large. Something like this happens in every industry. We'll see how this all plays out. Unfortunately this is going to turn out to be very expensive for all parties involved. The end result will be more scrutiny during hiring, which is good. It also will lessen the odds of this happening again, which is also good. Maintaining honest and straightforward business practices is always the best way to go.

"These two public companies now will be spending some of their company funds on lawyers, depositions and court appearances instead of focusing on their customers and their brands. That's the real shame."

Well put.