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FelCor, the US's No. 2 hotel real estate investment trust (REIT), and rival MeriStar Hospitality Corp. agreed to call off their $2.7 billion merger because of last week's steep stock market decline, the Financial Times reported. FelCor holds 185 hotels, among them Embassy Suites and Holiday Inn locations. Washington-based MeriStar holds a portfolio of 112 hotels in the Hilton, Sheraton, Marriott, and Westin chains. The deal, which was announced May 10, would have made Irving, Texas-based FelCor the largest hotel REIT, with properties in 39 states.

A severe dip in Las Vegas tourism and apparent infighting among the owners of the city's newest megaresort, the $1.2 billion Aladdin, prompted a warning that it may close only 13 months after opening. The hotel-casino also laid off 500 workers. The Aladdin has struggled with a heavy debt load and revenues from its casino have been below expectations.

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