The Hilton hotel chain has put the Las Vegas Hilton on notice that it intends to terminate its license agreement with the casino Jan. 1, which would force the property to give up the name it has held since the 1970s.
The 2009 agreement licenses the right to use the Hilton brand and links the property to Hilton's "Hhonors" loyalty program. It can be terminated by either party at any time and for any reason. Neither party offered a reason.
Las Vegas Hilton spokesman Owen Blicksilver said the property is in discussions with other major hotel brands and expects to announce a new affiliation before the end of the year. There's still an outside possibility the hotel will negotiate a new license agreement with Hilton, he added.
Built by Kirk Kerkorian in 1969, the former International Hotel went through multiple owners, including Hilton Hotels Corp., until private equity firm Colony Capital bought the property in 2004.
The Las Vegas Hilton is among several older casinos that are struggling in the downturn. First quarter losses widened for owner Colony Resorts LVH Acquisitions LLC as business fell. The property blamed "fixed labor and benefits costs" - or, difficulties trimming labor costs as revenue declined. Like some of its Strip competitors, the property reported increases in room rates and convention business in the first quarter, reflecting slightly improved business trends nationwide.
Lenders agreed to extend a loan worth about $250 million through 2012 after the Las Vegas Hilton stopped making interest payments on the loan last year. The agreement with lenders allows the Hilton to defer payments on the loan in exchange for a higher interest rate and capital contributions by Colony of up to $20 million.
"The notification by Hilton does not impact the management, ownership, operations, employees, vendors or guest services at our hotel," Blicksilver said. "This is a great property, an integral part of the Las Vegas experience and a key destination resort for both business and pleasure travelers. That will not change."