- Published on Wednesday, 22 February 2012 11:03
Article Read: 2691
Mining magnate Clive Palmer has announced a $60 million lawsuit against international hotel operator Hyatt Hotels Corporation after terminating the company's management agreement with his luxury golf resort and spa at Coolum.
Mr Palmer has announced that the resort would now be known as The Coolum Golf Resort and Spa, ending a 24 year association between the global hospitality company and the flagship Sunshine Coast property.
Hyatt took Mr Palmer to the Brisbane Supreme Court on 21 February after Palmer had announced he had dumped the company as the manager of the resort, removing its signage and sacking Hyatt's general manager, Maurice Holland.
Hyatt argued that Mr Palmer had breached the contract between the two by trying to remove it as resort manager and by sacking the general manager.
While Mr Palmer threatened to close the resort if the injunction was granted, the court granted it anyway.
The case will return to court on March 1.
Mr Palmer accused Hyatt of allegedly syphoning $60 million in funds from the Coolum resort over the past two decades. An application against Hyatt will be filed in the Queensland Supreme Court and a complaint will also be made about Hyatt's activities to authorities in the United States, he said.
"The Hyatt has managed the property for 24 years but in that time it has just led to millions of dollars in losses to the owners,'' Mr Palmer said. "The agreement has been based on increasing turnover rather than making a profit, a flawed business model which was delivering substandard results for stakeholders. The Hyatt hasn't given the property the priority it deserves.
"The Hyatt Group doesn't even have a full-time employee in Queensland and we believe they are not even represented in Australia,'' Mr Palmer alleges.
Resort general manager Maurice Holland, who lives on site, was allegedly dismissed after he filed an affidavit at midnight on Monday [20 Feb] on behalf of the Hyatt. Late on Tuesday [21 Feb], the Hyatt won a short term injunction in the Supreme Court stopping Mr Palmer's company from terminating Hyatt management.
Within hours the signs outside the five-star-resort were either being covered with black plastic bags or ripped down.
Hyatt issued a statement saying it was "considering its position".
"We are extremely surprised to receive notice that the hotel's owner wishes to terminate our long-standing management agreement and strongly disagree with Mr Palmer's characterisation of our performance."
Mr Palmer said he would invest a further $2 billion developing his Queensland tourism assets, with The Coolum Golf Resort and Spa receiving significant attention. The resort's 650 staff will benefit immediately, with Mr Palmer paying workers a $500 bonus each.
Mr Palmer has appointed his long-time senior executive Bill Schoch as general manager of the property.
"I have the utmost confidence in the current staff led by Bill delivering future success for the resort and the region as a whole,'' he said.
Mr Palmer said the resort would continue to be home to the Australian PGA Golf Championship and would be looking to bring additional high-calibre events to the Sunshine Coast.
The Hyatt chain, one of the world's top operators of luxury hotels and resorts, has 470 managed, franchised and owned properties in 45 countries.
Mr Palmer bought the Hyatt Regency Coolum Golf Resort and Spa, reported to be worth between $40-60 million, in the middle of last year, flagging a major rejuvenation of the premium 150ha site.
Mr Palmer said at the time he bought the hotel from Lend Lease and Japanese company Sekisui House because he believed it was a bargain at the bottom of the current cycle. "It's not a big risk for me with the money I have got, but as I say, I really think Queensland has enormous tourism potential and we have bought at the right time in the cycle."