East Avenue Development, the Texas company restoring the historic Elkhorn Lodge, has filed a lawsuit accusing the former owners of the Rocky Mountain Hotel and Conference Center of fraudulently inflating the hotel’s financial performance before its $16 million sale in 2023. The facility, located at 1701 N Lake Ave. in Estes Park, was rebranded as the Expedition Lodge.
EA Rocky Mountain, LLC filed the complaint on June 30 in the Larimer County District Court against Denver-based Trinity Hospitality, LLC, alleging the seller knowingly provided misleading financial statements, operating statistics, and revenue projections that overstated the hotel’s earning capacity and induced the buyer to pay millions more than the property was worth.
The lawsuit alleges fraudulent misrepresentation, fraudulent concealment, breach of contract and breach of a duty to disclose. Trinity Hospitality had not filed a response as of Wednesday afternoon.
Allegations in the lawsuit
According to the complaint, EA Rocky Mountain entered into a contract to purchase the Rocky Mountain Hotel in May 2023 and completed the acquisition that September for $16 million. The transaction included assumption of an existing loan, seller financing and approximately $4.9 million in cash at closing.
The buyer alleges that Trinity Hospitality provided a trailing 12-month financial statement showing approximately $3.48 million in total income and more than $1.1 million in net operating income, along with occupancy rates, average daily room rates, and revenue-per-available-room statistics that materially overstated the hotel’s financial performance. EA says it relied on those figures when purchasing the property and raising investor capital.
Among the complaint’s most significant allegations is that Trinity Hospitality artificially inflated hotel revenues through online travel agencies.
EA alleges it discovered unusually high Booking.com reservation volumes reflected in the seller’s records that were never replicated after the sale, despite renovations, upgraded technology, enhanced marketing, improved guest services and higher online review scores.
The lawsuit further alleges Trinity Hospitality purchased prepaid reservations through Booking.com and other online travel agencies before the sale to inflate both the hotel’s revenues and its online reviews.
After acquiring the property, EA renovated and rebranded it as Expedition Lodge. Despite those investments, the company says the hotel’s revenues fell well below the historical figures provided before closing.
The complaint states the hotel’s first full year under EA’s ownership generated approximately $2.35 million in revenue—about $1.39 million below projections based on the seller’s historical financial information. EA argues that the shortfall demonstrates the hotel’s historical revenues were artificially inflated and resulted in substantial financial losses.
The company is seeking at least $16 million in damages, along with attorney fees, court costs, and other relief the court deems appropriate.
Expedition Lodge fire
The lawsuit comes several months after Expedition Lodge was damaged in a two-alarm fire on Feb. 27.
Nearly 200 guests were evacuated after a fire broke out in a guest room, causing more than $500,000 in damage. Investigators determined the fire originated in Room 169, where authorities allege a propane heater had been brought inside.
In April, the Estes Park Police Department obtained an arrest warrant for the room’s 72-year-old occupant, Paul Todd Howarth, charging him with fourth-degree arson and felony criminal mischief. The criminal case remains pending.
Elkhorn Lodge restoration and rezoning controversy
The lawsuit comes as East Avenue Development continues restoring the historic Elkhorn Lodge while advancing a second phase of development that has become one of Estes Park’s most closely watched redevelopment projects.
Since purchasing the property in 2023, East Avenue has invested millions of dollars in constructing a new foundation beneath the main lodge, building new roads, and updating the property’s utility infrastructure. Original woodwork, fireplaces, and other architectural elements were removed for storage during the restoration, raising concerns among some local historians about their proper preservation.
In January, East Avenue opened the property for a public tour and said revenue from a proposed second phase of development would help finance the lodge’s restoration.
The proposal called for annexing about 40 acres into the Town of Estes Park for a mixed-use development featuring two hotels, treehouse-style lodging units and relocated historic cabins. Neighbors argued for lower-density zoning, while East Avenue said higher-density development was necessary to make the historic preservation project financially viable.
After months of public debate over traffic, neighborhood impacts, and project scale, the Town Board approved the annexation and higher-density zoning in January.
Justin Mabey, a principal of East Avenue Development and the public face of both the Elkhorn Lodge restoration and Expedition Lodge redevelopment, was reached by telephone by the Estes Valley Voice on Tuesday, July 7. Mabey declined to comment on the lawsuit, citing the advice of his attorney. EA Rocky Mountain, LLC is represented by John Wharton and Carson Heninger with the firm Greenberg Traurig in Denver.
Kumar Merchant, a principal of Trinity Hospitality was reached by phone today. He referred the Estes Valley Voice to his attorney, Diane Wolfson with the Sphere Law Firm in Denver.