Trump's legal woes sow uncertainty for hotel brand
With former President Donald Trump and his namesake company embroiled in a high-profile civil trial in New York, the future of some of Trump’s real estate and hospitality empire, including the Trump International Hotel & Tower New York, remains uncertain.
The $250 million suit, brought against the Trump Organization by New York state attorney general Letitia James, accuses Trump and his organization of fraudulently inflating Trump’s wealth and asset valuations in order to secure more favorable loan terms. Although the judge presiding over the case has already declared Trump and his team guilty of committing fraud, the hearing to determine the extent of damages and decide punishment is ongoing.
Chief among the possible penalties is the permanent loss of Trump’s business licenses in the state of New York.
According to Neama Rahmani, president and co-founder of California-based law firm West Coast Trial Lawyers, that would mean Trump would no longer be eligible to own property or operate a business in the state. Consequently, the Trump International Hotel & Tower New York, though not wholly Trump-owned, would no longer be able to tap Trump Hotels as its management or brand partner.
“It’s potentially a very significant blow for Donald Trump and his family if he indeed loses this case [and] the judge moves forward with canceling the business licenses,” Rahmani said.
If the Trump International Hotel & Tower New York were forced to drop its Trump Hotels affiliation, it wouldn’t be the first property to part ways with the brand in the wake of Trump’s entry into the political arena.
Within the past decade, the Trump Hotels portfolio has gone from 15 properties in 2015 to nine today, with hotels in Panama City, Toronto, Vancouver, New York and Washington, D.C. shedding Trump branding in recent years.
And it will soon lose another jewel in its crown. The Trump International Hotel Waikiki will undergo a reflagging this February. Hotel owner Irongate and Trump Hotels jointly released a statement saying that the pair had “come to a mutual agreement for a significant buyout of the hotel management and license agreements.”
The repositioned property will be known as the Wakea Waikiki Beach and will be affiliated with Hilton’s LXR Hotels & Resorts portfolio.
According to John Crotts, a professor of travel industry management at the University of Hawaii at Manoa, Irongate’s decision is reflective of a reversal of fortune for Trump Hotels.
“The Trump-branded hotels were always known for opulence, luxury and attention to detail among high-net-worth travelers,” said Crotts. Today, however, “its brand identity, image, culture and personality are deemed by many in its target audience to be quite controversial.”
Geoff Millar, co-owner of Phoenix-area agency Ultimate All-Inclusive Travel and Ultimate Hawaii Vacations, also said that the Trump brand appears to be hindering businesses looking to create broad audience appeal.
“I think the owner said, ‘Look, why are we dividing our potential clients into those for Trump and those not for Trump?'” said Millar, adding that there was presumably more to gain by positioning the hotel as politically neutral.
Millar also said that many Hawaii-focused agencies, including his own Ultimate Hawaii Vacations, have steered clear of selling the Trump International Hotel Waikiki. With the property rebranding and joining the Hilton fold, he would potentially add the hotel to his product mix.
“It’s a good product, and now that it’s becoming a Hilton, we probably will sell it,” Millar said. “Because clients won’t have to figure out whether or not they’re a ‘Trump person.'”
Rahmani agreed that the Trump brand and the hospitality sphere are virtually incompatible at this point.
“Most companies in the hospitality industry are not in the business of alienating 50% or more of the American people and engaging in this type of heated political rhetoric,” Rahmani said. “They want to be warm and welcoming. But that is not Donald Trump. The reality is, Donald Trump as a business person is very different than Donald Trump as a politician, and he’s trying to reconcile the two.”
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