Unionized employees at the OYO Times Square hotel have received a temporary stay on their termination following a decision by a Manhattan judge. The ruling prevents more than 25 workers from being dismissed after the landlord, OYO Hotels, failed to provide the legally required 90-day notice before the planned layoffs, as reported by Crain’s.
New York County Supreme Court Judge Andrea Masley commented on the situation, stating, “That’s completely outrageous, actually, to terminate the employees without the notice to which they are entitled.” The judge extended a temporary order to halt the firings.
The dispute began in early August when OYO notified property manager Highgate Hotels that it was canceling its contract, a move Highgate claims was unexpected. According to a lawsuit filed by Highgate, the termination attempt occurred four years before the scheduled end of their 10-year management agreement. OYO cited issues related to another property managed by Highgate as part of its reasoning.
The management agreement entitled Highgate to a 3.25 percent share of the hotel’s gross revenue from its 208 rooms. Highgate has described the Times Square property as “well-performing,” while OYO disagreed with this assessment in its termination notice and announced plans to appoint a new, unnamed property manager.
This legal battle involves two major players in the hospitality industry. Highgate manages over 30 hotels in New York and more than 500 worldwide. OYO, supported by SoftBank, recently acquired Motel 6 from Blackstone for $525 million and is preparing for an initial public offering that could value the company at $8 billion.
Some observers suggest that OYO’s attempt to end its agreement with Highgate may be aimed at reducing costs and improving financial results ahead of its IPO.
Judge Masley advised both parties’ lawyers, “Eventually you’re going to break up. So figure out a way to do it pleasantly and expeditiously or I’ll find a way to do it.”
— Holden Walter-Warner
