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November 12, 2018

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LVH hotel-casino receiver seeks cash for signs, repairs

Image

Steve Marcus

A view of the Las Vegas Hilton marquee sign November 26, 2007.

A court-appointed receiver for LVH — Las Vegas Hotel & Casino says business is suffering at the property and it needs new signage and assorted refurbishments and repairs.

Ronald Johnson was named receiver of the property, representing the interests of its key lender, effective Feb. 1 under the settlement of a legal dispute with the lender.

That was after the former Las Vegas Hilton defaulted on its $252 million mortgage, lender/investor Goldman Sachs initiated foreclosure proceedings and majority owner Colony Capital LLC agreed to walk away after concluding its investment in the Hilton was worth nothing.

Johnson commented on the status of the property Wednesday in the first of his periodic reports to Clark County District Court Judge Elizabeth Gonzalez, who presided over the lawsuit between Goldman Sachs Mortgage Co. and the LVH’s parent company.

Johnson said that since the LVH lost the right to use the Hilton name on Jan. 3, business has suffered. For reasons that haven’t been disclosed, the property’s Hilton license wasn’t renewed.

''The termination of the Hilton License Agreement, coupled with the fact that the property did not have the financial resources to purchase replacement exterior signage or to initiate a new brand advertising campaign to attract leisure travelers, has had a dramatic negative impact on hotel occupancy,'' his report said. ''Dramatically lower occupancy levels have, in turn, had a negative impact on other revenue departments (i.e. gaming, food and beverage and retail).''

Johnson also reported that the 2,950-room hotel-casino on Paradise Road needs $700,000 for exterior signage to replace the Hilton signs, $300,000 for ongoing fixes of cited code violations, $125,000 to replace or repair hotel room furniture and fixtures, $675,000 for convention area carpet and wallpaper replacement and repair, and $512,000 for replacement of worn out items in various departments.

To address these issues, Johnson said he’ll ask Goldman Sachs to allow him to use $2.1 million in a capital expense reserve account, plus he’ll seek $1.2 million for transition and brand development marketing and $1.5 million to cover projected cash flow shortfalls.

In addition, he reported, ''Steps are being taken to intensify room sales efforts by increasing the leisure travel sales staff, by offering specials to customers in the hotel and gaming databases, and by increasing the utilization of outside brokers and discount websites.''

Johnson and Goldman Sachs haven’t commented on long-term plans for the property once the foreclosure is complete — such as whether Goldman Sachs will fold the LVH into its Las Vegas gaming company American Casino & Entertainment Properties LLC (ACEP).

ACEP owns the Stratosphere and two Arizona Charlie’s casinos in Las Vegas and the Aquarius in Laughlin.

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