Hotel Condominiums: Federal Courts Dismiss Antitrust Claims

CHICAGO—Homeowner associations of hotel condominiums have filed suit against developers and hotel management companies for illegal tying violations under the federal antitrust laws in two important cases. While these suits have been unsuccessful, the courts have chosen not to publish their decisions, making it difficult to find their rulings, and depriving the parties of the precedent which would provide leverage for cutting short such actions in future.

In the most recent case, suit was filed by the board of directors of the homeowners association for the Raffaello, a 175-room hotel condominium in Chicago.[1]  The Raffaello was formed as a hotel condominium where the developer, and later an affiliated management company, owned the Shared Facilities Unit (“SFU”). Under Raffaello’s Declaration, the unit owners, their personal guests and hotel guests had access to and benefited from the SFU and its operations, and the unit owners were required to reimburse the SFU owner for its operational expenses. After the condominium was formed, a voluntary rental program was implemented, whereby unit owners could participate in the proceeds from the rental of their units.