American Casino & Entertainment Properties LLC, owner of the Stratosphere, on Thursday posted a bigger first-quarter loss than a year earlier and a moderate decline in revenues.
The Las Vegas-based gaming company attributed the loss to the Stratosphere spending more on advertising, and a struggling economy that saw fewer people visit the casino.
"The local market continues to be tough. I don't see a light at the end of the tunnel," Ned Martin, American Casino's chief financial officer and treasurer, said during a conference call with analysts.
American Casino, which owns four hotels in Las Vegas and Laughlin, said it lost $6.2 million in the first quarter compared with a loss of $2.7 million a year earlier.
Net revenues declined 1.5 percent to $86.4 million. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, decreased 15.2 percent to $16.7 million.
The company said it spent $2.4 million on advertising as the Stratosphere launched its "Elevate Your Expectations" advertising campaign designed to highlight the property's recent upgrades. Also, Arizona Charlie's Decatur began a campaign to promote its new restaurant, Ron's Steakhouse.
Martin said the campaign has "created a lot of activity" around the Stratosphere as the 2,427-room hotel saw an increase in first-quarter convention bookings.
Martin told analysts the company would take a break from the campaign, but would evaluate its continuing impact to decide whether to spend the $1.5 million it had set aside for additional advertising.
The Stratosphere's net revenues increased 3 percent with the company reporting flat occupancy and increases in the average daily room rate and food and beverage revenue.
Convention and group bookings increased 25 percent over last year. Martin expected the Stratosphere to get its "fair share going forward as convention bookings pick up."
However, casino revenue declined because of lower head counts and a 2.3 percent decrease in table games hold.
"We still see people coming to the casinos, they just don't spend as much," he said.
The average daily room rate at the Stratosphere increased from $43.39 to $50.50 while occupancy held steady at 84.5 percent.
Despite the increase in rates, the hotel was charging $15 less per weekday and $20 less on the weekend between the new and old rooms. So far, 909 rooms have been renovated, with no plans to finish the rest this year, Martin said.
At the two Arizona Charlie's properties in Southern Nevada, net revenue declined 4.5 percent in the first quarter, to $25.5 million. In Laughlin, the Aquarius' net revenue decreased 5.3 percent, to $23.1 million.
The Aquarius has been hurt by construction on Casino Drive, which is the Laughlin resort corridor's main street. Martin told analysts he expects the project to be completed in June, but second-quarter earnings would be affected.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893.