Baha Mar management partner fears allayed
A leading hotel analyst yesterday allayed concerns that the$2.6 billion Baha Mar resort development may be in for more challenges, following recent debt issues being faced by the Morgans Hotel Group, recently selected to run Baha Mar’s 300-room lifestyle hotel.
That company is now facing debt obligations on the 1500-room Hard Rock Hotel in Las Vegas, which sparked concerns here in the business community of a negative impact on Baha Mar.
Parris Jordan of HVS Consulting, one of the world’s top hospitality consultants, moved to clear up any misconceptions that financial challenges at the Las Vegas entity will affect Morgans’local business ties.
“No alarms yet, this is just one hotel,”Jordan, who has worked with both Morgans and Hard Rock, toldGuardian Businessyesterday.”They manage and have ownership interest in 13 hotels.”
“The Morgans brand is well capitalized and the brand overall isn’t affected.”
Robert Sands, Baha Mar’s senior vice president of governmental and external affairs toldGuardian Businessthat he was not aware of any financial difficulty with the Morgans Hotel Group.
His statement came as the business community buzzed yesterday over reports that the Baha Mar’s lifestyle hotel partner was in serious financial trouble over at least one of its Vegas properties. The Morgans Hotel Group manages the Las Vegas Hard Rock property and owns a 12.8%stake. It also manages the Delano, on South Beach, Florida.
The Las Vegas hotel completed a$750 million expansion early this year. The upgrades included 865 new rooms and suites,
according to the Las Vegas Sun, and not dissimilar to hotels around the world, appears to have trouble filling all the new rooms profitably.
“Due to the continued difficulties in the Las Vegas market, Hard Rock’s operating cash flows have not been sufficient to cover the aggregate debt service this year,”the Morgans Hotel Group said in an earlier regulatory filing, obtained byGuardian Business.”There have been some months where the ownership joint venture was required to use funds from reserves to service the debt.
“Unless the market improves markedly, or the joint venture generates additional liquidity, there is a risk to Morgans’equity position and management agreement, which may be terminated by the lenders in the event of foreclosure or under certain other circumstances.”
According to Morgans officials the report did not mean that the Las Vegas hotel would be foreclosed on, and other options to resolve the situation were being examined.
Baha Mar intends to add 2200 rooms to its inventory over a five-month phase-in of four new properties in late 2014. The other identified management partners for the hotels are the Grand Hyatt for the conference hotel and Rosewood for the luxury hotel. Branding for the casino hotel will be determined some time after construction starts, according to Tom Dunlap, executive vice president of development and construction at Baha Mar in an earlier statement.