Earlier in the week I posted about a lawsuit Starwood filed against Le Parker Meridien, whereby the owners apparently got more than a million dollars in fraudulent reimbursements from Starwood. At the time there weren’t many more details other than the New York Post article, though Loyalty Lobby found a copy of the lawsuit, which is an interesting read.

This seems to center around Starwood’s reimbursement of award stays. If a hotel is at least 95% full they’re compensated by Starwood at the average daily rate. If the hotel is less than 95% full they’re reimbursed at a set level. Apparently the difference between these amounts can be over $200 per night.

So the hotel allegedly falsified records whenever they got close to the 95% occupancy level in order to get the higher reimbursement from Starwood. They did this by making reservations under fake names. The way they did this is by allegedly booking “fake” comped travel agent stays (referred to as FAMs, or familiarization trips). Hotels only usually book comped travel agent stays during periods of low occupancy, so it was suspicious when they did this during a period of high occupancy. What I find equally interesting is that Starwood apparently seems to count these comped stays towards the 95% occupancy level. So in a way they are incentivizing hotels to offer comped travel agent stays during periods of high occupancy. But that’s besides the point here, since they weren’t even offering travel agents comped stays, but were rather just making them up.

From reading the lawsuit it’s amazing just how many employees knew about the lot, and how they were told never to refer to it in emails.

  1. January 11th, 2013 at 1:33 pm

    eric mueller said,

    wow. that’s some crazy stuff… I wonder what this means for the future of the Le P M brand and its relationship with Starwood?

  2. January 11th, 2013 at 3:28 pm

    Rob said,

    Of course they’re not incentivizing comp rooms when hotels are full — that’s when hotels get to CHARGE a lot for rooms. They don’t want to give away rooms when occ is high!!

  3. January 11th, 2013 at 3:46 pm

    Steve said,

    I wish this dreadful hotel would just die. It’s really an awful place. It’s uncomfortable and over-priced. And snooty. Please die!

  4. January 11th, 2013 at 8:43 pm

    Jamison @ Points Summary said,

    no wonder the Le Parker Meridien NYC was super high priced when other similar category hotels were in the average price range

  5. January 12th, 2013 at 5:14 pm

    Kevin said,

    I really don’t care as long as my two stays this week get me SPG points and the le meridien bonus as well!

  6. Add A Comment

home top

One Mile at a Time is owned by PointsPros, Inc. Some links to credit cards and other products on this website will earn an affiliate commission, and this website has a financial relationship with several credit card issuing banks. All content unless otherwise noted or quoted is the author's own, and not provided or commissioned by any other entity. This site is for entertainment purpose only. The owner of this site is not an investment advisor, financial planner, nor legal or tax professional and articles here are of an opinion and general nature and should not be relied upon for individual circumstances.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.