Morgans Hotel Group is set to come into $140 million with the sale of the Royalton and Morgans hotels, both in New York City, to an affiliate of FelCor Lodging Trust Incorporated. Morgans will continue to operate the hotels under a 15-year management agreement with one 10-year extension option. The transaction is expected to close in the second quarter and is subject to satisfaction of customary closing conditions. The sales price for the two hotels represents a value of approximately $500,000 per room.
Michael Gross, CEO of Morgans, was pleased with the outcome as "an important continuation in our shift toward an 'asset light' business model, allowing us to focus on higher margin management and branding opportunities."
According to the Wall Street Journal, FelCor said "it can enhance the hotels' value by adding guest rooms, improving the fitness center and guest lounge at the Morgans and boosting food and beverage offerings." Morgans has spent more than $30 million in the last three years renovating the hotels.
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