I ran across this thread and thought I would post some updated info on this subject. (From a source close to the issue)
As I now understand it the normal and emergency feeders were not installed in the same "duct." They were however, installed through the same man holes.
A bit of clarification is in order here. The "emergency" feeders were in fact an optional standby system making the mixing of systems NEC compliant. The true emergency system for the hotel worked just fine.
The initial problem resulted from a faulted cable.
More clarification! The cables were not racked in the manholes. They were laying on top of each other and the stress at a pinch point (probably where the cable enters or exits the duct) damaged the cable. Also, there was an engineering decision to rely the cable shields as the equipment grounding conductors. The end result of which contributed to the the overheating and failure of the cable.
The faulted cable was on the bottom taking out many of the cables above it when it failed. This is why the optional standby system didn't work. The transfer switches are smart enough not to transfer into a fault. The cables that were active had to be de-energized to work on the system.
A couple of thing can be learned here.
1.Always rack and fireproof medium voltage cables in man holes.
2.Always run a table 250.122 sized equipment grounding conductor with medium voltage circuits. (Shields are not rated to Carry ground faults for more than a few cycles. After which over heating and cable damage will surely occur.)
3.Spend the money to do partial discharge testing once a year. This small investment would have caught this problem before it happened.

One sad side note: I never saw this in the news but heard it from industry sources.
After the hotel was up and running again an electrician from (I believe) the original installing contractor and a rep from the transfer switch manufacturer were looking at an issue in the medium voltage gear. The electrician reach inside to point something out when the voltage tracked down his arm and flashed over. The electrician Died of his injuries a few days later and the transfer switch rep was severely burned. The transfer switch rep was doing start up on one of our jobs when this happened but I haven't hared an update on him in a while. I will post back to this thread when I found out.

Disclaimer: All info is second hand from people closely involved in the re-work. I believe everything I have stated to be accurate.