Markets

One More Mondrian in Europe - Analyst Blog

A note book and a piece of paper.
Credit: Shutterstock photo

Morgans Hotel Group Co. ( MHGC ) recently penned a 20-year management agreement with a Mondrian-branded hotel in Istanbul. The agreement has a 10-year extension option. The property will be owned by Bella Group. Per the deal, upon completion and inauguration in 2014, Morgans will continue to operate the hotel. The US hotelier will infuse approximately $10 million in the form of equity and key money and will enjoy a 20% ownership interest in the venture.

The 128-room property will strategically be located at the historical city area of Istanbul, Turkey. Given the fact that Istanbul serves as a gateway and an interconnector between Asia and Europe, we believe the property will be able to attract business and leisure travelers throughout the year. Geographically, Morgans' development pipeline remains focused on Europe as its brands appear quite in harmony with the region.

This new deal represents the fourth management contract for a Mondrian-branded hotel in an international location. The property will be the seventh Mondrian in the company's portfolio. Earlier this month, Morgans announced that it will open another Mondrian in London. Apart from Europe, the company is focusing on the Middle East as well as the key cities in South America and Asia. Morgans' intention is validated by some other hotel management agreements for Mondrian-branded hotels in Doha, Qatar and Nassau, Bahamas that were signed this year.

MorgansHotel, which competes with the hotel giant Wyndham Worldwide Corporation ( WYN ), currently retains a Zacks #4 Rank that translates into a short-term Sell rating. However, we reiterate our long-term Neutral recommendation on the stock.

MORGANS HOTEL ( MHGC ): Free Stock Analysis Report

WYNDHAM WORLDWD ( WYN ): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More