Morgans Hotel Group Co. (MHGC) is extending the period of service of its chief executive officer (CEO) Fred Kleisner by 3 months. Kleisner was supposed to resign upon the completion of his tenure on December 31.
The New York-based company began the hunt for its new CEO in late summer or early fall. The company also appointed the executive search firm Spencer Stuart to speed up the pursuit. Although Morgans Hotel has not yet been able to find an appropriate candidate, management expects to find the replacement by March 2011.
We believe it will be quite challenging for the company to find a suitable replacement for Fred Kleisner, as he boasts four decades of experience in the hotel industry. Moreover, his dedicated service has helped the company scale new heights.
The company reported a loss of 49 cents during the third quarter of 2010, below the Zacks Consensus Estimate of a loss of 33 cents. However, total revenue rose 2.3% year over year to $57.7 million. Adjusted EBITDA soared 15.3% from the prior-year quarter to $11.4 million.
The RevPAR (revenue per available room) for system-wide comparable hotels jumped 10.0% (up 11.2% on a constant-dollar basis) driven by a rise in occupancy and average daily rate (ADR) with a revival in economy along with a rise in business travel and leisure demand.
For fiscal 2010, the company estimates that if RevPAR increases by approximately 9% to 10% year over year, adjusted EBITDA will be in the range of $53 million to $55 million.
Morgans Hotel currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
Morgans Hotel is a leader in the boutique sector of the hotel industry. It owns three New York properties, including the company’s first hotel, Morgans, as well as the Royalton and the Hudson. Morgans Hotel also owns the Mondrian in Los Angeles and South Beach, the Delano and Shore Club in South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Primary competitors of Morgans Hotel include Choice Hotel International Inc. (CHH) and Orient Express Hotels Ltd. (OEH).
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MORGANS HOTEL (MHGC): Free Stock Analysis Report
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