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Trump’s company officially halts hotel expansion

UPDATED: Fri., Feb. 15, 2019

In this June 5, 2017  photo, Eric Trump, left, and Donald Trump Jr., executive vice presidents of The Trump Organization, pose for a photograph in New York at an event announcing plans to launch two new hotel chains catering to budget and mid-priced travelers. On Thursday, Feb. 14, 2019, the Trump Organization announced that it will no longer try to open hotels under its Scion and American Idea brands which would have been marketed to budget and mid-priced travelers. (Kathy Willens / AP)
In this June 5, 2017 photo, Eric Trump, left, and Donald Trump Jr., executive vice presidents of The Trump Organization, pose for a photograph in New York at an event announcing plans to launch two new hotel chains catering to budget and mid-priced travelers. On Thursday, Feb. 14, 2019, the Trump Organization announced that it will no longer try to open hotels under its Scion and American Idea brands which would have been marketed to budget and mid-priced travelers. (Kathy Willens / AP)
By Jonathan O’Connell and David A. Fahrenthold Washington Post

President Donald Trump’s company officially shelved plans Friday to create two hotel chains aimed at reaching customers mostly in places where the president has become politically popular.

The president’s eldest sons, Donald Trump Jr. and Eric Trump, who took over the company when Trump entered the White House, cited political attacks and negative media coverage in announcing the decision.

The brothers announced plans for the two lower-cost chains in a reception at Trump Tower shortly after Trump took office. Since then, the company has come under near-constant scrutiny from ethics officials and congressional Democrats over its business practices. After initially saying the company had dozens of deals in the works, no hotels, under the chain names of Scion and American Idea, have opened.

“We live in a climate where everything will be used against us, whether by the fake news or by Democrats who are only interested in Presidential harassment and wasting everyone’s time,” Eric Trump said in a statement Friday.

The decision marked a first voluntary step back for the company since Trump took office.

When it launched the brands, the company announced that the first Scion and American Idea hotels would be in the Mississippi Delta, through a partnership with Mississippi businessman Dinesh Chawla and his brother, Suresh.

The Chawlas, owners of 18 hotels in the Gulf Coast region, are developing a 100-room hotel and conference center on 17 acres in Cleveland, Mississippi. The project is expected to cost the family more than $20 million and was to be the nation’s first Scion before the Trump Organization cut ties with the family this week.

Reached by phone, Dinesh Chawla declined to comment. But in a Friday afternoon Facebook post, he said the company was fine financially, that the project would proceed and that he remained friends with the Trumps.

“We were together for two years, but I learned so much from them,” Chawla wrote. “I’m sorry that they are not with us anymore legally, but we are partners of a different sort—spiritually on this project.”

In their statement, Donald Trump Jr. and Eric Trump said they enjoyed working with the Chawlas and said “their hotel in Cleveland will be an absolutely spectacular project.”

In December, Dinesh Chawla said two of his family’s other Mississippi hotels, a Comfort Inn in Clarksdale and a Rodeway Inn in Greenville, were being renovated and were on pace to open this spring or summer as the country’s first American Idea hotels. It is not immediately known what will become of those projects.

With Trump in office, the Trump Organization agreed not to pursue any new foreign deals, canceling what the company says was “ ‘billions of dollars’ worth of projects.” The company also restricted who could invest in its properties and hired an outside ethics counsel to review any new projects that it was planning to pursue.

But because the president continues to hold a financial interest in the company, the Trump Organization has come under fire from critics charging that the company – and its expansion plans in particular – create conflicts of interest.

In two lawsuits wending their way through federal courts, the attorneys general of the District of Columbia and Maryland argue Trump is violating the Constitution’s emoluments clause, which bars gifts or payments from foreign or state governments.

Democrats on Capitol Hill are preparing a series of investigations into the president’s business, focused particularly on his District hotel, which has benefited from spending by foreign governments and federal lobbyists.

Most recently, Sen. Elizabeth Warren, D-Mass., and Rep. Pramila Jayapal, D-Wash., wrote to the Trump Organization demanding information about why T-Mobile executives had booked dozens of rooms at the Trump District hotel after asking the Trump administration to approve a major merger.

With expansion made difficult, the Trump Organization has been left to defend its position in existing properties. The company lost branding and management deals for hotels in Toronto, Panama and New York. And owners of apartment and condominium complexes in New York have taken the Trump name down, saying the brand was hurting their property values.

In recent weeks, the company has been purging undocumented workers from the staffs of at least five of its golf properties.

Trump’s sons indicated they plan to restart their plans when their father leaves office.

“When politics are over, we will resume doing what we do best which is building the best and most luxurious properties in the world – the interest in the Trump brand has never been stronger,” Donald Trump Jr. said in the statement.

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