The Las Vegas Hilton reported another quarterly loss on Tuesday and disclosed it’s been skipping interest payments on a loan, putting it into default status.
The 2,950-room Paradise Road hotel-casino lost $8.864 million in the second quarter vs. a loss of $9.851 million in 2010’s second quarter.
Amid tough competition and an oversupply of hotel rooms in Las Vegas, net revenue of $45.5 million was down from $47.5 million.
Casino revenue of $14.2 million declined 9.1 percent, the Hilton reported.
The Hilton’s table games played unlucky in the quarter, with their win declining by $800,000; while slot play declined due to a slowdown in business. This resulted in a $1.2 million decline in slot winnings from gamblers.
Hotel room revenue was steady at about $19.3 million, while food and beverage revenue fell 8.6 percent to $14.4 million.
The Hilton’s owner, Colony Resorts LVH Acquisitions LLC, during the quarter said it was notified by Hilton Hotels Corp. that Hilton was not renewing the Las Vegas property’s right to use the Hilton name and room reservation system effective Jan. 3, 2012.
On Tuesday, Colony Resorts LVH said it’s been in "discussions with other major hotel brands'' about a new name.
"The company may also reach a similar understanding with Hilton and sign a new license agreement," Colony Resorts LVH said in its earnings report.
Colony Resorts LVH also reported that it chose not to make monthly interest payments totaling $3.5 million for June, July and August on its $252 million term loan "in order to conserve liquidity for operating and other needs." The loan makes up the bulk of the company's $296 million in debt and liabilities.
While the lender is now entitled to exercise various remedies due to the default, Colony Resorts LVH said it’s "currently in discussions with its lender to negotiate a restructuring of its debt, the outcome of which is uncertain."
The term loan lender is Goldman Sachs Commercial Mortgage Capital L.P.
A Goldman Sachs affiliate is an investor in Colony Resorts LVH and this is not the first time the term loan has been in default, with the last default resolved in July 2010.
This means the current default may again be resolved on friendly terms.