Wednesday, September 5, 2012

HBE and the DoJ

Janet Reno, the Department of Justice and the Adam’s Mark Hotels & Resorts.

A lot of people would say that the FSK, for all his faults and gruff exterior, must be doing something right. Granted, the company has seen tremendous growth for the founder. Growth, however, that cannot be closely scrutinized because the company is private. The ups and downs of the firm are not as easy to spot as a publicly traded firm that must disclose indicators about its fiscal health. Nothing paints a clearer picture of the organization, perhaps than the reaction and events surrounding the charges in December of 1999 by Janet Reno, the United States Attorney General, that Adam’s Mark Hotels and Resorts have practiced discrimination at its properties. The Adam’s Mark Hotels and Resorts, in 1999 had 24 hotels in 13 states. Most were designed with large ballrooms and space ideal for group business. One of the larger properties was ideally situated in Daytona Beach.

Circumstances surrounding the Black College Reunion weekend in Daytona Beach, Florida and black guests at the Adam’s Mark Hotel in Daytona Beach who claimed the hotel discriminated against them during that busy weekend. The original complaints about treatment received during the weekend in June of 1999 – based on the facts of the case would have been dismissed a dozen times. The complaints revolved around, among other things, the hotel’s practice of asking hotel guests to wear wristbands and provide deposits if they were not paying by credit card. He could have admitted that his hotel employees could have been more sensitive to these patrons and that action would be taken to assure that the greatest care would be given to guarantee equal treatment for all hotel guests in the future. Instead, digging in his heels, Fred Kummer and his hotel chain became a good target. FSK insisted that the hotel had done nothing wrong. His very stubbornness allowed a class-action time and fuel to be joined by the NAACP and eventually the Attorney General of the State of Florida and finally the United States Attorney General. “It’s hard to believe that in this day and age that a pattern of racial discrimination can still exist…the Department of Justice is investigating the Adam’s Mark Hotel & Resorts chain…” The U.S. Attorney General, Janet Reno, gave FSK the equivalent of a hot foot! Reno’s remarks were broadcast and
rebroadcast on national television and radio. The charges had a devastating effect on business for the hotel chain. Groups stopped booking the Adam’s Mark and others scrambled to back out of their earlier commitments. No group wants to hold an annual meeting at a venue that may cause protests. No meeting planners want to deal with individuals that cancel their plans based on the charges of discrimination. It was a no win situation for meeting planners. So rather than deal with the flack – they selected another hotel. The hopelessly inarticulate FSK was stuck between a rock and a hard place. His dilemma was as twisted as the suspect being interrogated with the opening question: “Have you stopped beating your wife?”

Quickly, Fred Kummer scrambled to hire lawyers and crisis communications specialists, but it was too late. The case was too broadly known and the damage to bookings was too severe for Fred and his beleaguered hotel chain. By February 2000, HBE/ Adam’s Mark offered to settle the case with the Department of Justice (DoJ). The employee training and provisions of the settlement would cost upwards of $8 Million. Fred would admit no wrongdoing, lose a ton of business from the bad publicity and never fully recover from the charges. The original case was thrown out but once the settlement was in force Fred Kummer could not back out. Even with the Republican Administration and the new U.S. Attorney General (John Ashcroft from Missouri), Fred’s PR was too hot to handle. In spite of campaign contributions – John Ashcroft could not lighten the burden on FSK.

At one point Fred Kummer asked me to find him a writer who could help him tell his story. Indeed, he would have an interesting view of the injustice of the situation. Unfortunately, he abandoned the project in favor of trying to rebuild his hotel business.

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