Hilton, Palacio Debate TX Hotel Construction

SAN ANTONIO Hilton Hotels Corp. accused longtime associate Palacio del Rio Ltd. of trying to stop construction of an Embassy Suites hotel on the River Walk. The charge comes after a $50 million lawsuit was filed against Hilton in September by Palacio, a subsidiary of H.B. Zachry Company. Hilton has managed the Hilton Palacio del Rio Hotel since it opened in 1968, but the 32-year marriage was severely tested in November 1999 when Hilton merged with Promus Hotel Corp. Although Palacio has an exclusivity clause in its contract prohibiting Hilton from managing other hotels in Bexar County, the merger gave Hilton responsibility for a dozen hotels in the area. Palacio del Rio complained that Hilton is now managing competing hotels with a total of 1,975 rooms in Bexar County. But the real problem is the proposed 240-room Embassy Suites on the River Walk. However, this is not the only city where the Hilton/Promus merger has caused a problem. Hotelarama Associates Ltd. sued Hilton last year, claiming the merger violated an exclusive management clause it had in Dade and Broward counties, FL. Source: San Antonio Express-