ITT to Run 4 of Sheik’s Former Ritz-Carltons

ITT Corp. said Monday that it signed one-year contracts to manage four former Ritz-Carlton hotels owned by billionaire Saudi businessman Sheik Abdul Aziz al Ibrahim, bringing its portfolio of luxury hotels to 53.

The hotels--in New York; Aspen, Colo.; Washington; and Houston--are controlled by Al Anwa, the sheik’s Los Angeles-based investment company. ITT, which owns the Sheraton hotel chain and the Caesars World casinos, said it expects to sign long-term agreements to manage the hotels. Terms of the contracts were not disclosed.

The move comes two weeks after hotel manager Ritz-Carlton Hotel Co., which is 49% owned by Marriott International Inc., took its name off the hotels and severed its management agreements with the properties. Ritz-Carlton says the sheik owes $4 million in unpaid fees. A judge later ruled the hotels couldn’t continue using the Ritz-Carlton name.

For New York-based ITT, which is fighting an $11.5-billion hostile takeover bid from Beverly Hills-based Hilton Hotels Corp., the contracts give it added presence in the booming luxury hotel business, where demand far exceeds new supply. The company already owns and manages such luxury hotels as the St. Regis in New York and the Phoenician in Scottsdale, Ariz.

The new contracts contain provisions that allow the sheik to terminate the agreements if ITT is acquired in a hostile takeover, ITT said. ITT is moving ahead with plans to split into three separate concerns in its bid to thwart Hilton. One spinoff company, to be called ITT Destinations Inc., will own ITT’s Sheraton chain and its casinos--the assets Hilton covets.

But on Monday, investor advisor Institutional Shareholder Services said ITT should give investors the opportunity to vote on its plan to break up the company.

The opinion from ISS, which advises institutional shareholders, comes as Hilton seeks to derail ITT’s breakup plan in federal court in Nevada. Hilton is asking the judge to compel ITT to hold a shareholder vote on the split. If ITT breaks up, that would hurt Hilton’s chances of success, analysts say.