Management Dispute at Capella Pedregal Continues

The management dispute at Cabo San Lucas resort Capella Pedregal (also known as The Resort at Pedregal) continues with the announcement that a New York Supreme Court Judge has ordered that Capella Hotels and Resorts be reinstated as the management company of the Capella Pedregal, Cabo San Lucas, effective immediately, according to a statement by Atlanta-based Capella Hotel Group (CHG). 

“We are very pleased with this decision, and look forward to managing the Capella Pedregal on a long-term basis,” said Horst Schulze, chairman and CEO, Capella Hotel Group.

Hoteles del Cabo, owner of the resort, has released a statement of its own describing their decision to remove Capella Hotels and Resorts from management of the property. 

Capella's termination resulted from improper financial reporting and diversion of revenues through improper fee calculations, Hoteles del Cabo said. Hoteles has instituted legal action to recover the misappropriated funds and will pursue its remedies for other defaults under the management agreement.

“We have spent several months working with Capella Hotel Group to try and resolve the defaults,” said a spokesperson for Hoteles del Cabo in a written release. “Specifically, Hoteles del Cabo presented Capella Hotel Group with a letter of notice of default on August 14, 2014, that showed various violations, including unauthorized payments to themselves and false financial reports.”

The spokesperson added, "Capella responded to their termination by making a public spectacle of a private business matter, issuing a statement claiming to be an innocent bystander caught in an ownership dispute. In fact, they were terminated for their failure to honor the terms of their management agreement, failures we attempted to resolve in good faith.”

"Beyond its mismanagement of the property itself, Capella has held funds donated by generous patrons to help the neediest team members recover from the devastating effects of Hurricane Odile," the spokesperson continued. “Capella is holding tens of thousands of dollars intended specifically to help hotel associates get their lives back in order following the horrific storms that have plagued Cabo recently. For reasons beyond our knowledge, they have opted not to distribute those funds. This is not only unacceptable for the unfortunate families involved, but should be doubly embarrassing in light of the fact that the funds were donated by our guests."

Hoteles del Cabo reported that it has distributed $125,000 directly to employees of the hotel.

The spokesperson noted that Hoteles has been disappointed by the Capella Hotel Group's inability to establish itself as a global brand. 

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