Morgans Hotel Group Announces Preliminary Fourth-Quarter Results and Revises Full Year Guidance
Due to difficult economic conditions that impacted the travel industry in the fourth quarter, particularly at luxury hotels and in urban markets such as New York City, the Company expects to report a decline in RevPAR in constant dollars from Comparable Hotels of 19% versus the fourth quarter of 2007 and a decline of 4% for the full year 2008 as compared to 2007.
Morgans Hotel Group Co. (NASDAQ: MHGC) announced its preliminary expectations for revenue per available room (RevPAR) for the fourth quarter and year ended December 31, 2008 and Adjusted EBITDA for the year ended December 31, 2008. Due to difficult economic conditions that impacted the travel industry in the fourth quarter, particularly at luxury hotels and in urban markets such as New York City, the Company expects to report a decline in RevPAR in constant dollars from Comparable Hotels1 of 19% versus the fourth quarter of 2007 and a decline of 4% for the full year 2008 as compared to 2007. As a result of this RevPAR expectation, the Company estimates that Adjusted EBITDA2 for the year ended December 31, 2008 will be in the $92-$94 million range.
Fred Kleisner, CEO of Morgans Hotel Group said, 'We continue to take a proactive approach in dealing with the challenges presented by this unprecedented economic cycle. We are mitigating the impact of declining revenues through targeted cost controls structured to avoid affecting the unique experience we offer our guests. In addition to the $10 million of annual cost reductions announced in November 2008, we have recently implemented plans to further reduce annual operating expenses by approximately $5 million and additional measures may be considered. As a result of our aggressive expense control, the ratio of the EBITDA percentage decline to the RevPAR percentage decline at the hotel level for the fourth quarter of 2008 was approximately 1.5 to 1.0, which we believe is significantly better than the industry norm. '
Mr. Kleisner continued, 'With approximately $50 million in cash at December 31, 2008, limited capital commitments, no significant consolidated maturities in 2009 and three unencumbered assets, we believe our financial position remains solid.'
Morgans plans to issue its earnings release for the fourth quarter 2008 after the market closes on February 26, 2009.
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