Ennismore founder accused of ‘sabotage’ in rival hotel deal

Sharan Pasricha, the entrepreneur behind the luxury Hoxton hotel chain, has been accused by the owner of rival NoMad hotels of trying to “sabotage” efforts to find a buyer for half of its business in 2018, according to a lawsuit filed in New York.

NoMad owner Sydell Group on Monday sued Pasricha and his Ennismore hotel group in a New York court claiming the hotelier breached a confidentiality agreement and engaged in tortious interference after his talks to finance a buyout of US billionaire Ron Burkle’s 50 per cent stake in Sydell broke down in 2018. Sydell is seeking about $30mn in damages.

The lawsuit detailed a dispute between the rival hotel groups that flared up after Sydell founder Andrew Zobler dramatically fell out with Burkle in 2017 and went looking for outside investment to replace his longtime business partner.

Zobler entered into discussions with MGM Resorts International and Pasricha respectively over the summer of 2018 about financing a buyout of Burkle’s stake. Zobler told Pasricha he was also in negotiations with MGM and revealed the minimum viable price for the deal, according to the lawsuit, which said Pasricha was subject to a confidentiality agreement.

Zobler ultimately decided to partner with MGM on the buyout, leading to what the lawsuit alleged was “an overly emotional and malicious reaction” from Pasricha. Pasricha “was so affronted that he decided to sabotage the transaction rather than allow [Sydell] to obtain the benefit of the financing deal that they elected to do with another, superior party”, the lawsuit argued.

An Ennismore spokesman dismissed the claim brought by Sydell and Zobler as “completely baseless”.

“We deny the matters raised and will defend vigorously against these meritless claims,” he added. The defendants are yet to respond to the lawsuit in court.

According to the lawsuit, a New York arbitrator was asked as part of the sale to determine whether MGM should pay the price Burkle’s private equity firm Yucaipa proposed for his stake, or a much lower one suggested by Sydell. MGM had agreed that, should the lower price be selected, it would pay Zobler and Sydell a portion of the difference between the two offers — amounting to more than $15mn, the lawsuit said.

The arbitrator chose the lower price. But later, Sydell alleged, Pasricha approached Yucaipa directly about a sale in “knowing disregard” of the obligations under his confidentiality agreement. Pasricha then allegedly told Yucaipa that Sydell was working to finance its purchase with MGM — a company with which Yucaipa had a longstanding relationship, the lawsuit said.

As a result, Yucaipa “exerted extraordinary pressure” on MGM to ignore the arbitration decision and pay the higher price, depriving Zobler and Sydell of their potential payout, the lawsuit said. Ennismore co-chief executive Gaurav Bhushan is also named as a defendant in the case.

The lawsuit also detailed how Yucaipa had agreed to indemnify Pasricha for any claims arising from his communications about the sale. The filing argues that Pasricha’s decision to seek indemnity showed he “acted . . . with malice” against the plaintiffs.

Sydell declined to comment, while Yucaipa and MGM did not immediately respond to a request for comment.

Funded in large part by Pasricha’s billionaire father-in-law Sunil Bharti Mittal, who built India’s largest telecoms business, Ennismore has been on a rapid expansion drive in recent years, buying up prime hotel assets like Scotland’s Gleneagles estate and expanding its Hoxton chain to a dozen sites, with 10 more in the pipeline.

In 2021, Europe’s biggest hotel group Accor merged a quarter of its brands into Ennismore, taking a majority stake in the business, which is valued at £2bn in total.

Since 2018, upmarket hotel brand NoMad has added outposts in London, Los Angeles and Las Vegas, but financial troubles due to the pandemic led to the foreclosure of its original New York location in 2021. Sydell Group, which has failed to turn a profit in recent years, was involved in the development of Square Mile members’ club The Ned and also owns the upmarket Freehand and Line hotel chains.