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Briefs: Will MGM, Caesars roll the dice together?

Will MGM, Caesars roll the dice? MGM has hired investment bank Morgan Stanley as well as a law firm to study the potential for a merger with Caesars Entertainment, a gaming source told the New York Post on Monday. No offers have been made, according to The Post story, but activist hedge funds, which own about 25% of underperforming Caesars, have been pushing for an MGM deal, sources said. The funds were seen as behind last week’s resignation of Caesars CEO Mark Frissora. If combined, MGM and Caesars would own about half the hotel rooms in Las Vegas and Atlantic City, which could trigger regulatory concerns.

Read New York Post story

Host close to selling huge Sheraton. Host Hotels & Resorts reportedly is in discussion to sell the Sheraton New York Times Square for approximately US$495 million. R.W. Baird analyst Michael Bellisario said on Monday that in its Form 10-Q, Host stated in 3Q18 that it recorded a US$216 million impairment charge related to the 1,780-room hotel. The filing noted that following the impairment, the US$495 million carrying value for the hotel is within a range of sales prices currently being negotiated with a potential buyer, which would imply a US$278,100 per key deal and a 27x multiple based on 2017A EBITDA. If sold, the deal would leave Host with just two New York City properties, both of which appear to be longer-term holds given that they are part of the new capital investment/re-development program with Marriott. Host and Marriott have made a deal in which Host will invest US$600 million to renovate five Marriott properties while Marriott lowers its incentive management fees and offers profit guarantees to make up for the disruption.

Hesperia leaves NH, aligns with Apple Leisure. Apple Leisure Group and Grupo Inversor Hesperia on Tuesday announced a strategic alliance to operate its four resorts in Spain with the AMResorts brands. ALG will oversee worldwide sales and marketing of the properties under the AMResorts brands beginning in 2019. It is the first agreement by Hesperia after its decision to terminate the management agreement it had with NH, following the latter’s change in management. The four hotels are currently operated under the Hesperia brand. Beginning in 2019, two will operate under the adults-only Secrets Resorts & Spas brand, and the other two under the family-friendly brands: Dreams Resorts & Spas and Amigo Resorts. As part of the brand conversion process, Hesperia plans to invest more than 20 million at the four hotels.

Very pretty in Dubai. Lemon Tree, New Delhi, has reportedly signed a license agreement for a 114-room hotel in Dubai under it Lemon Tree Hotel brand. The hotel is expected to be operational by June 2019 with Carnation Hotels Private Ltd., the hotel management arm of the company, operating and marketing the property.

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