Hilton ending franchise agreement with Las Vegas Hilton


Is an iconic Las Vegas hotel brand name looking for a new home?

It was looking more likely Wednesday after Hilton Worldwide notified the owner of the famed Las Vegas Hilton that it plans to terminate its franchise license agreement by the end of the year.

Hilton Worldwide said that as of Jan. 1, its franchise agreement with Colony Resorts LVH Acquisitions LLC, owner and operator of the Las Vegas Hilton, will have been terminated, forcing the off-Strip hotel to give up the Hilton name and loyalty program.

"We have been in discussions with other major hotel brands and may re-engage with Hilton in the coming months regarding a new franchise agreement," said Owen Blicksilver, a spokesman for the Las Vegas Hilton. "We expect to announce an affiliation with a major hotel chain before year's end."

Blicksilver said Hilton's notification would not "impact the management, ownership, operations, employees, vendor or guest services at our hotel."

"Pursuant to the license agreement, either party may terminate the agreement without cause at any time after Jan. 1, 2011. Unless the parties reach an agreement otherwise, the effective date of the termination will be Jan. 1, 2012," according to a Colony Resorts filing with the Securities and Exchange Commission.

Neither Hilton Worldwide nor Colony Resorts would comment on the reasons for terminating what will be an eight-year business relationship at the end of the current contract. The current three-year license, signed in 2009, gives Colony Resorts the right to use the Hilton brand, and it links the property to Hilton's "Honors" loyalty program.

That doesn't mean Hilton is leaving Las Vegas, however.

"Hilton has 17 hotels representing six of our brands in the Las Vegas area," a Hilton Worldwide spokesman said Wednesday. "We continue to explore a number of projects in strategic markets."

Hilton Worldwide, based in McLean, Va., operates its Hilton Grand Vacations, Doubletree, Embassy Suites, Homewood Suites, Hampton Inn and Hilton Garden brands in Las Vegas.

David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, said he expects the Hilton name to remain associated with gambling and the Strip.

"Hilton might just affiliate with an existing casino, like Cosmopolitan with Marriott," Schwartz said. "The Tropicana might be a good candidate, as might Treasure Island or even the Stratosphere."

For Colony Resorts, he said, it would mean a costly name change "at a time when it doesn't have much, if any, money to spare."

Colony Resorts lost $3.3 million on net revenue of $52 million in the quarter ended March 31, an increase from the $2 million loss, on $54 million in net revenue, in the same quarter of 2010.

As far as names go for the Hilton property, Schwartz suggested a return to "International."

The 64 acres the hotel sits on was originally occupied in the 1950s by the Las Vegas Park Speedway, a horse and auto racing facility. The hotel was built in 1969 by Kirk Kerkorian and opened as the International Hotel.

Barbra Streisand was the opening-night act, but the International, followed by the Hilton, was known as the Las Vegas home to Elvis Presley. In 1969, Presley performed 58 consecutive sold-out shows, playing to 130,157 fans. The King broke his own attendance record three times in February 1970, August 1970 and August 1972. Presley also maintained a residence at the Hilton until December 1976.

The hotel has changed hands several times, starting in 1970 when Hilton Hotels Corp. bought it and in 1971 renamed it the Las Vegas Hilton. Shortly after the company split into two different companies in 1998, Hilton Gaming merged with Bally Entertainment Corp.

The company was renamed Park Place Entertainment, which bought Caesars World in 2000. Four years later, Park Place sold the Las Vegas Hilton to Colony Capital LLC for $280 million.

Colony Capital, a Los Angeles-based private equity firm, then transferred the property to its subsidiary Colony Resorts LVH Acquisitions LLC.

The hotel, next to the Las Vegas Convention Center, has 2,956 rooms and 305 suites and a 74,000-square-foot casino, with a dozen restaurants and the Hilton Theater showroom.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.

 

Rules for posting comments

Comments posted below are from readers. In no way do they represent the view of Stephens Media LLC or this newspaper. This is a public forum. Read our guidelines for posting. If you believe that a commenter has not followed these guidelines, please click the FLAG icon next to the comment.