The seminal hotel brand, Hilton, will disappear from the two largest gaming destinations in the United States after executives canceled deals that allowed casino hotels to use the name in Las Vegas and Atlantic City. Last month, the legendary hotel company terminated agreements with the Las Vegas and Atlantic City Hiltons that would pull their brands off the casino resorts. Both properties were owned at one time by divisions of the real estate investment company Colony Capital, which still controls the Las Vegas Hilton.
In Las Vegas, Hilton Hotels terminated a deal signed in 2009, which allowed the Las Vegas Hilton to use the name and participate in the Hhonors program. A provision in the agreement allowed either party to withdraw for any reason. The announcement sets a date of January 1, 2012 for the name to be erased from the property. A spokesman for the property said negotiations are ongoing with other hotel brands to replace Hilton, and said there is an outside chance the Hilton deal could be salvaged.
The Las Vegas Hilton, like most elderly properties in the town, has been struggling over the past few years. The decline in Las Vegas convention business in 2008-09 really hurt due to its location adjacent to the Las Vegas Convention Center. The hotel’s Star Trek attraction departed in 2010, and capital reinvestment was slight.
Colony Capital stopped making interest payments on a $250 million loan last year, and lenders extended the financing through 2012 in exchange for a higher interest rate and a capital contribution of as much as $20 million. First-quarter results were once again disappointing, with the company blaming “fixed costs” such as labor and benefits for the loss.
Things are measurably worse for the Atlantic City Hilton. Already a seriously distressed property searching for a buyer in a distressed market, the casino immediately began referring to itself as ACH, rather than the Atlantic City Hilton. The change was reflected on the company’s website and by operators answering the hotel’s phones.
A spokesman for Hilton Hotels & Resorts said the branding agreement has been terminated effective immediately.
“It’s not recognized as a Hilton,” John Forrest Ales told the Atlantic City Press. “If the agreement is terminated, the property can no longer be part of the Hilton brand.”
