The Westin Hotel at the Denver International Airport still hasn’t fully opened its books to an audit, according to Denver Auditor Timothy O’Brien.
O’Brien’s office first set out to audit the city-owned facility in June 2018. A city auditor was tasked with auditing whether Westin, which Denver contracts with to operate the hotel, was in compliance with the parties’ contractual agreement.
And for that, O’Brien has argued his office requires full, unfettered access to all records, but access has been “significantly limited.” O’Brien said Wednesday during a committee briefing to Denver City Council members that his office hasn’t made any progress in accessing records at the hotel.
During the meeting Wednesday, lawyers for the auditor’s office and airport said they don’t believe Westin is in breach of contract. Additionally, they are working on an amendment to the contract, revising the audit clause to provide clarity on the process. No vote was held on contract revisions during the briefing.
The auditor’s office has requested detailed information at the transaction level to determine that revenue was calculated accurately and that expenses were truly expenses, as well as that the management fee (the amount Westin receives from revenues for operating the hotel) is quantified correctly, O’Brien said.
“Like all contracts, there is a clause in that contract that says the auditor can access information in order to determine if the vendor, which in this case is Westin, is in compliance with the contract,” O’Brien said.
The auditor recently wrote a letter to Denver Mayor Michael Hancock and other city officials arguing the hotel was in breach of the contract and they should be given notice to vacate the property.
Under the contract, Westin receives a fixed amount of $700,000 for managing the hotel and all operating expenses deducted from revenue. The remaining revenue goes to the airport, which totaled about $26 million in 2018, according to Gisela Shanahan, DIA chief operating officer. Shanahan noted the hotel has been wildly successful.
By December 2018, O’Brien said it felt like his office had reached an impasse with Westin in terms of receiving complete information, at which point the office issued an audit report articulating that Westin wasn’t complying and a complete audit couldn’t be completed. The audit was then closed.
Westin has in the past stated that the documents requested by the auditor’s office are proprietary. But Wednesday officials with the hotel said they have provided documents and pledged to hand over all information requested by the auditor.
Jack Buckley, Westin director of finance, said in providing the documents to O’Brien’s office, there seemed to be misunderstandings or miscommunication on the nature of the information, but the auditor’s office failed to follow up.
In response to the Westin’s claim to proprietary, O’Brien stated his office isn’t seeking information about how they price their rooms, but rather, for instance, how they handled a discount for airport employees and ensuring the discount wasn't given out arbitrarily.
“We can’t have any contractor throwing a proprietary information blanket over all the information that they have,” O’Brien said.
O’Brien said he wants to believe what the hotel has to say on how it has handled the management fee, but his office needs to see the books.
“It’s kind of a trust but verify,” he said.
Councilwoman Robin Kniech said not being able to ensure that the airport is receiving all of the revenue it is due is just as concerning as the auditor not having access.
“I find this deeply concerning and I think it’s essential that the Westin provide the information being requested by the auditor as quickly as possible,” Kniech said.
Kniech added that the auditor should provide a written list of all information needed to Westin and carbon copy the council. She also floated the idea of a neutral party to mediate the dispute.
When asked by Councilwoman Stacie Gilmore to provide the items at the top of the list of documents his office needed to complete an audit, O’Brien said he required a copy of the employee manual and policy and procedure manuals that the hotel operates under, transaction records, customer surveys.
Councilman Christopher Herdon questioned by the auditor closed the audit if he was still seeking information and records from Westin. O’Brien responded, ”There’s only so much time you want to spend not getting what you need to conduct the audit.”
O’Brien said he plans to follow up with Westin late this year or early 2020.