Morgans Hotel Group dips after swinging to a 1Q loss

NEW YORK - Morgans Hotel Group Co.'s stock sagged Friday after the hotel operator said it swung to a first-quarter loss on increased losses from joint ventures.

Late Thursday Morgans reported a loss of $7 million, or 22 cents per share, compared with year-ago profit of $436,000, or a penny per share. Revenue for the period ended March 31 gained 3 percent to $80.7 million from $78.4 million.

Analysts predicted a smaller loss of 16 cents per share on higher sales of $81.8 million.

The company said losses from joint ventures nearly doubled to $8 million from $4.7 million. The joint ventures include the Mondrian South Beach and excess land and branding rights at properties including Delano Las Vegas and Mondrian SoHo. The year-ago period also benefited from $5.7 million in non-operating income.

Revenue per available room for systemwide comparable hotels rose 1.5 percent. Excluding the impact of the past two Super Bowls, revenue per available room gained 5.4 percent.

Revenue per available room, also known as revpar, is a key measure of a lodging company's performance.

Oppenheimer & Co.'s David Katz said Morgans' quarterly loss was larger than his 15-cents-per-share estimate. Existing capital structure is still squeezing the stock, he added.

"Although management has indicated its intention to pursue transactions to unlock value and reduce leverage, we believe transactions in the near-term could be challenging and time may prove the most effective cure for this ailment," Katz wrote in a client note.

He reaffirmed an "Outperform" rating and cut his price target to $24 from $25.

Shares of New York-based Morgans Hotel Group shed 72 cents, or 4.8 percent, to $14.29 in afternoon trading. The stock has traded in a range of $12.13 to $25.93 over the past year.

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