COMPANY OVERVIEW March 2009

Transcription

1 COMPANY OVERVIEW March 2009

2 FORWARD-LOOKING STATEMENTS Certain statements in this presentation and our response to various questions may constitute forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of These forward-looking statements can be identified by the use of words such as expects, plans, estimates, projects, intends, believes, guidance, and similar expressions that do not relate to historical matters. Such forward-looking statements are based on current expectations and involve certain risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forwardlooking statements is contained in the Company s Annual Report or Form 10-K for the year ended December 31, 2007 and in other reports filed with the Securities and Exchange Commission. All forward-looking statements in this presentation and our responses to various questions are made as of the date hereof, based upon information known to us as of the date hereof, and we assume no obligations to update or revise any of the forward-looking statements even if experience or future changes show that indicated results or events will not be realized.

3 INVESTOR HIGHLIGHTS STRONG, FOCUSED BUSINESS MODEL Highly differentiated brands in prime locations within historically strong markets Proven track record of outperforming competitive set Creator and continued leader of boutique hotel segment DEMONSTRATED FINANCIAL STABILITY Significant recent operating expense reductions No significant near-term recourse debt maturities Three unleveraged properties as of December 31, 2008 Limited capital commitments GROWTH STRATEGY Recently completed four hotel repositionings and one new hotel opening Compelling long-term expansion strategy 1

4 STRONG, FOCUSED BUSINESS MODEL

5 OPERATING MODEL Operates and owns or has ownership interests in 12 hotels comprising approximately 3,700 hotel rooms Portfolio of world renowned boutique hotel, restaurant and bar brands Valuable real estate assets in prime locations in New York, Miami, Los Angeles and London Focus on management and branding opportunities 2

6 WORLD-RENOWNED HOTEL BRANDS Morgans Hotel Group and its distinctive hotel brands offer guests a hip, cutting-edge experience in the world of hotels as theatre DELANO MONDRIAN Our goal is to create an engaging, oneof-a-kind customized experience Energetic, upbeat atmosphere Distinctive restaurants Dynamic bars SANDERSON HARD ROCK THE ORIGINALS Morgans Royalton Hudson Clift St. Martins Lane Ground breaking, modern design Luxury amenities such as spas and pools Special events and celebrity guests 3

7 DYNAMIC ENVIRONMENTS Marquee Restaurants and Bars Attract both local clientele and hotel guests Significant profit centers Well recognized brands that drive hotel night stays and rate Celebrity Events High profile events, public relations blitzes, and celebrity sightings Recent high-profile events: The Academy Awards Private After Party Art Basel Delano, Mondrian, The Shore Club Grammys various record label parties London Fashion Week After Party Asia de Cuba Skybar Blue Door Hudson Bar 4

8 MAJOR MARKET FOCUS Historically strong markets with a focus on 24-hour gateway cities San Francisco Boston New York The Ames 2 London Clift 1 Los Las Vegas Angeles Palm Springs Scottsdale Morgans 1 St Martins Lane 1 Mondrian 1 Royalton 1 Hard Rock Hotel & Casino 1 Miami Sanderson 1 Mondrian 1 Dubai Mondrian3 Delano 1 Shore Club 1 Hudson 1 1 Existing Hotels 2 Hotels under Development 3 Signed Deals Awaiting Financing Delano/Mondrian Development 3 The Gale 3 Mondrian 1 Mondrian 2 Delano 3 5

9 OUR CUSTOMERS Based on our market research, we believe our customers generally have the following characteristics: Well-educated (over 80% with at least a college degree) Typically between 25 and 49 years old Adventuresome and seek unique, new experiences On average, 55% are business travelers and 45% are leisure travelers Approximately 30% of room revenues are from corporate negotiated accounts Main industries: technology, financial services, entertainment, advertising, fashion and consumer goods Approximately 36% of guests at our comparable U.S. hotels in 2008 were international travelers Approximately 30% of total revenues within the U.S. and 50% of total revenues within the U.K. were generated by brand loyal repeat guests in

10 COST REDUCTONS /STRONG EXECUTION A proactive approach to cost reductions resulted in significant savings Multi-phase plan initiated in early 2008 resulting in approximately $10 million of cost savings in 2008 All reductions made following a highly targeted approach designed not to affect guest experience These reductions in 2008 enabled us to achieve a ratio of 1.4 times the EBITDA percentage decline to the RevPAR percentage decline in Q4 2008, better than industry norms Additional reductions in late 2008 and early 2009 are estimated to result in annualized savings of approximately $15 million in 2009 Additional reductions will be implemented in

11 DEMONSTRATED FINANCIAL STABILITY

12 LIQUIDITY SUMMARY Approximately $50 million in cash and $21 million of restricted cash at December 31, 2008 We generated $25 million in free cash flow after interest and maintenance capital in 2008 A proactive approach to cost reductions resulting in a 1.4x ratio of EBITDA percentage decline to RevPAR percentage decline We have completed our renovation program and have no deferred capital expenditure or maintenance issues at our owned hotels No near term recourse debt maturities As of December 31, 2008, we had three unleveraged hotels with $32 million of EBITDA in 2008 that are collateral for our revolving credit facility which was undrawn at December 31, 2008 We are in compliance with our debt covenant ratios We have approximately $60 million of tax NOLs which can be used to offset taxes on future income, including gains on sales of assets 8

13 CASH POSITION AS OF DECEMBER 31, 2008 We had $50 million in cash at December 31, 2008 plus a revolving credit facility with no outstanding borrowings As of Dec. 31, 2008 ($ in millions) Cash and Cash Equivalents $49.2 Less: Estimated Commitments on New Projects (1) ($22.0) Cash in Excess of Commitments $27.2 Note 1. Includes the $11.1 million to fund the letters of credit posted for the Hard Rock expansion and $4.2 million to fund the letters of credit posted for the completion of Boston Ames 9

14 CASH FLOW We generated $25 million in free cash flow after interest and maintenance capital in 2008 Twelve Months Ended December 2008 ($ in millions) Adjusted EBITDA - Consolidated Operations (1) $71.5 Adjusted Interest Expense - Consolidated Operations (1) ($35.0) Estimated Maintenance Capital (2) ($11.8) Estimated Cash Flow $24.7 Notes 1. Excludes the Clift hotel which is operated pursuant to a lease agreement accounted for as a capitalized lease obligation 2. Assumes a 4% reserve on total revenues 10

15 DEBT SUMMARY No corporate debt maturities for six years December 2008 Instrument ($ in millions) Security Maturity Convertible Notes $172.5 October 2014 Trust Preferred 50.1 August 2036 Revolving Credit 0.0 Delano, Royalton, Morgans October 2011 Total Corporate Non-recourse Mortgage Note Hudson July 2010 (1) Non-recourse Mortgage Note Mondrian LA July 2010 (1) Non-recourse Mortgage Note 40.0 Mondrian Scottsdale May 2009 (2) Non-recourse Mortgage Note 10.0 The Gale January 2010 Other 6.2 Various Adjusted Debt (3) $648.8 Notes 1. Debt may be extended to October 2011 if the hotel achieves a 1.55 interest coverage ratio for the first and second quarters of If we do not meet the extension test, we have the ability to prepay a portion of the mortgages to qualify for the extension 2. Management in discussions with lenders. We do not intend to invest additional capital or fund cash flow deficits at this hotel 3. Consolidated debt of $730.4 million as of December 31, 2008 less Clift lease obligation of $81.6 million as of December 31,

16 UNLEVERAGED ASSETS As of December 31, 2008, we had three unleveraged assets that generated approximately $32 million in EBITDA in 2008 Year Outstanding Debt Ended December 2008 At December 2008 (2) ($ in millions) ($ in millions) Delano $22.1 $0.0 Royalton $6.6 $0.0 Morgans (1) $3.0 $0.0 Total $31.7 $0.0 Notes 1. EBITDA for the year ended December 31, 2008 was affected by rooms out of service and pre-opening expenses incurred during renovation 2. As of December 31, 2008, there were $15.3 million in outstanding pledged letters of credit 12

17 COVENANT CALCULATIONS We are in compliance with our debt covenant ratios Actual Permitted As of December 31, 2008 Ratio Ratios Trust Preferred Minimum Fixed Coverage Ratio 2.4x 1.4x Revolving Credit Facility Interest Expense Coverage Ratio (1) 2.4x 1.75x Leverage Ratio (1) 4.4x 6.0x Amount Outstanding Maximum Borrowing Base Availability (2)(3) $0 million $225 million $162 million Notes 1. Covenants are calculated based on consolidated hotels and exclude EBITDA and debt related to unconsolidated joint ventures. The convertible bond and trust preferred notes are excluded from the leverage ratio but included in the interest coverage ratio 2. Amount is after $15.3 million in outstanding pledged letters of credit (i.e. $11.1 million for Hard Rock expansion and $4.2 million for Boston Ames completion) and assumes an increase in the Delano Miami borrowing capacity and payment of related additional recording tax 3. Corporate covenants may reduce the ability to spend all of the amounts that may be borrowed 13

18 EBITDA AND DEBT ANALYSIS ($ in millions) 12 Months Ended As of Dec. 31, 2008 Dec. 31, 2008 Adjusted EBITDA Net Debt EBITDA from Operating Hotels: Morgans (1) / Royalton / Delano $31.7 Hudson Mondrian LA (1) London - 50% Interest Total Estimated EBITDA from Operating Hotels ex. Scottsdale (2) Mondrian Scottsdale Other (1) (7.7) Less: Cash (49.2) Total Cash Invested in Assets Under Development in 2008 (3) : Hard Rock $61.7 Mondrian South Beach 34.2 Mondrian Soho 7.3 Ames Boston 6.8 Gale 10.5 Total $120.5 Notes 1. Under renovation in Corporate debt is trading at a significant discount to par value 3. Represents cash invested and does not include equity in income or losses of unconsolidated joint ventures 14

19 GROWTH STRATEGY

20 REPOSITIONING Major renovations now completed with four owned hotels now fully renovated and reimagined Estimated EBITDA impact from owned rooms out of service in 2008 was $10 million Completed: Morgans Fully renovated rooms and lobby, completed September 2008 Mondrian LA Fully renovated and reconfigured rooms and upgrades to lobby, completed September 2008 Royalton Fully renovated rooms, lobby and a new restaurant, Brasserie 44, completed in October 2007 Delano Completed room renovations, expanded Agua spa and opened the Florida Room lounge designed by Lenny Kravitzand KravitzDesign in December 2007 Opening of Mondrian South Beach in December

21 BUILT-IN GROWTH Two hotels and a hotel addition under development, with financing in place, comprising approximately 1,300 rooms Five future hotels, all pending financing, comprising approximately 1,900 rooms, and two expansion opportunities at Hudson New Projects and Expansion Hard Rock Expansion Mondrian SoHo Boston Ames Future Projects Subject to Financing Hudson Room Expansion The Gale, Miami Delano Dubai Mondrian Palm Springs Mondrian Las Vegas Delano Las Vegas Hudson Lower Level Expansion Late 2009 / Early

22 BRAND EXPANSION STRATEGY Focus on management agreements to expand our portfolio of brands in attractive new markets, including international locations We believe our infrastructure, scalable operations and flexible business model provide us with competitive advantages Markets at IPO Additions Target Markets New York Los Angeles Miami San Francisco London New York Las Vegas Scottsdale Miami Boston Palm Springs (1) Dubai (1) Select major international markets currently under consideration in: United States Europe Middle East Note 1. Assuming financing is obtained 17

23 SCALABLE INFRASTRUCTURE WEBSITE MORGANSHOTELGROUP.COM 20% of total room revenue New website launched on February 28, 2009 Enhanced functionality which allows guests to more easily book rooms as well as spa appointments, restaurant reservations and other services SALES Sales force segmented by industry and booking source Over 100-person team across our hotels Corporate accounts in major industries SERVICE Customer satisfaction routinely evaluated with favorable results using third-party consumer research STATE OF THE ART TECHNOLOGY MHG employs what it believes are among the best systems available to the hospitality industry 18

24 CONCLUSION

25 SUMMARY STRONG, FOCUSED BUSINESS MODEL Highly differentiated brands in prime locations within historically strong markets Proven track record of outperforming competitive set Creator and continued leader of boutique hotel segment DEMONSTRATED FINANCIAL STABILITY Significant recent operating expense reductions No significant near-term recourse debt maturities Three unleveraged properties as of December 31, 2008 Limited capital commitments GROWTH STRATEGY Recently completed four hotel repositionings and one new hotel opening Compelling long-term expansion strategy 19

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