(Source: TravelMole.com)

A Maryland Federal Court has awarded the Indonesian owners of the Ritz-Carlton Bali Resort & Spa US$10 million in punitive damages from Ritz-Carlton and its parent, Marriott International.  The jury found that the Ritz-Carlton violated a non-compete and exclusivity agreement by participating in the development of the competitive, nearby Bulgari Resort in Bali.

BaliDiscovery.com said the Maryland court ruling could chill the tendency of large hotel groups to continue forming multiple hotel brands.

Robert LaFleur, a lodging analyst quoted by the Wall Street Journal said: "One of the ways hotel companies have continued to expand is through brand extensions. They'd either modify an existing brand or come up with a new brand, and that would be seen as a way to get around territorial restrictions that franchisees or hotel owners have."

The suit, originally filed in 2005 by KMS, charged Maryland-based Ritz-Carlton Co. LLC with fraud, breach of contract and breach of fiduciary duty.

The Maryland Daily Record quoted an attorney for KMS, William A. Brewer, as saying, "Ritz-Carlton continuously lied to our client about the nature of the involvement of the Ritz-Carlton employees, standards, and assets in the building of what was a competitive brand next door."

Brewer claimed that "Ritz Carlton abused its privileges as operators of the KMS hotel and used confidential and proprietary information owned by KMS to plan and develop the competing Bulgari hotel while concealing those profits from KMS".

The suit charged the hotel operators with using names, assets and resources in opening and operating the Bulgari property.