Financial problems continue to plague the Hard Rock Hotel in Las Vegas, its management company announced Wednesday.
"Unless the market improves markedly, or the joint venture generates additional liquidity, there is a risk to (our) equity position and management agreement, which may be terminated by the lenders in the event of foreclosure," Morgan Hotels Group Co., manager of the Hard Rock and a minority investor, said in its third-quarter earnings report.
In a regulatory filing with the Securities and Exchange Commission, the company attributed the hotel's deteriorating financial condition to "the continued difficulties in the Las Vegas market."
The Hard Rock is owned by Morgans Hotel Group and its equity partner CDLJ Merchant Banking Partners. Earlier this year, the Hard Rock completed a $750 million expansion that included new rooms and suites.
"There have been some months where the ownership joint venture was required to use funds from reserves to service the debt," the company said.
New York-based Morgans reported a net loss of $37.1 million, or $1.30 a share, for the third quarter, compared with a loss of $27.8 million, or 92 cents per share, for the same period last year.
The company said Morgans Hotel Group's share, based on its 12.8 percent equity holding, had earnings before interest, taxes, depreciation and amortization from the joint venture in the quarter ended Sept. 30 of $680,000.
Morgans said Hard Rock's hotel occupancy in the third quarter was 81.3 percent, down from 89 percent in the year-ago quarter.
The average daily room rate declined 5.5 percent to $126.02, while revenue per available room sank 13.6 percent to $102.45.
Contact reporter Chris Sieroty at csieroty @reviewjournal.com or 702-477-3893.