After striking out twice at Detroit City Council, the owners of the Crowne Plaza in downtown Detroit are pulling the plug on a new 500-room 28-story hotel tower connected to Cobo Center — for now — and considering new hotel investments in Houston and San Diego instead.

Operadora de Servicio Para Hoteles de Lujo, a Mexican and European investor group that bought the former Hotel Pontchartrain out of bankruptcy in 2013, has decided to stop pursuing the project after council members suggested the company should sign a neutrality agreement for a labor union to represent hotel workers.

The investor group's board met Thursday and decided to shift its new U.S. investment to Texas and California after two failed City Council votes on a plan that sought no tax breaks or subsidies for a $164 million project, said Gerardo Carreno, asset manager for the hotel's owners.

"We are not walking away from this opportunity; we will just put it on hold and on the queue until the time is right," Carreno told Crain's. "In the meantime, we will focus on other markets, but we are still fully committed to Detroit with our current operation."

The Crowne Plaza's owners submitted plans for a second tower — which was originally envisioned when the Pontchartrain was built in the mid-1960s — in December and had been in talks with Ideal Group in southwest Detroit on being the general contractor.

"They just feel upset that we're a current constituent, we're current on our taxes, we're a good citizen, and we're treated with this kind of defamation of character," Carreno said of his company's board members. "It's just not right."

Detroit City Council voted 2-6 on Tuesday on the plans for a second tower, which would have included a bridge over Washington Boulevard connecting the hotel to the Cobo Center — a standard feature for most convention centers in northern cities.

Mayor Mike Duggan's administration has been neutral on the project.

"The silence from the administration is deafening in this situation," Councilman Scott Benson said before voting "no" on the second hotel tower.

Duggan's planning department greenlighted the site plans for council approval months ago.

"No one from Crowne Plaza has asked the mayor to get engaged in resolving their issue," Duggan spokesman John Roach said Friday. "If they do, we will study it at that time."

Crowne Plaza hotel mangers say City Council members have leveled "false claims" that the hotel has faulty elevators; is staffed by temporary workers; doesn't pay the state minimum wage; and has a bedbug infestation.

The hotel's managers have worked for months to disprove all of those claims, hoping to satisfy council members, who even questioned whether the company had the support of Cobo Center and the Detroit Metro Convention & Visitors Bureau to build a new hotel to support Cobo's large convention business.

"We've gone to meeting after meeting and worked to tell the truth about the hotel and abide by any standard that they've set," said Lee Cote, assistant general manager of the hotel. "And then every time that we go back, they've said, 'Well, even though we said that was really the standard, here's the new standard.' And we've gone and met that time after time."