Riviera posts first-quarter loss

Revenues are continuing to go south for many of the north Strip casinos.

The latest example of a north-end casino reporting continuing losses came Monday when the Riviera reported losing $856,000 in the first quarter ended March 31. This came as overall gaming revenues are starting to show signs of stabilizing.

The Riviera's loss was driven by the economic downturn that has curbed consumer spending at casinos and comes on the heels of other May filings showing MGM Mirage's Circus Circus had a $3.6 million operating loss and the Stratosphere, which doesn't report operating revenues, had a 10.9 percent net revenue decline for the quarter.

Circus Circus, which is on the north Strip across the street from the Riviera, was the only one of MGM Mirage's nine Strip casinos open more than a year to post an operational loss for the quarter.

A gaming analyst, however, suggested Monday that the north Strip properties might be getting squeezed by more than just the bad economy.

Independent gaming analyst Frank Martin said the four older properties on the more isolated north end of the Strip -- Riviera, Stratosphere, Circus Circus and the Sahara -- are probably losing many of their customers to south Strip properties that are offering more special promotions.

Harrah's Entertainment, for example, recently introduced a $34.99 all-day buffet pass that can be used at seven of the company's Las Vegas properties.

"All the north Strip casinos are vulnerable to this kind of poaching. There is very little they can do about it," Martin said. "Circus Circus can argue that its $25 all-day buffet is cheaper by $10, but it doesn't come with the citywide access.

"If (north-end properties) lose $20 million a quarter to a citywide buffet, not just in food revenue, but in gaming and ancillary activities that guests are now spending at Harrah's casinos, the impact will be severe."

Martin said the north Strip casinos are particularly vulnerable to this type of competition now because the area is not very pedestrian-friendly because of empty lots and half-finished buildings, such as the Fontainebleau, which stands on the corner of Las Vegas and Riviera boulevards.

The Riviera's poor quarterly performance helped drive its parent company, Riviera Holdings Corp., to a first-quarter net loss of $4.5 million, a filing Monday with the Securities and Exchange Commission shows.

The loss equates to 36 cents per share, an increase from the prior year's loss of $1.04 million, or 8 cents per share.

Riviera Holdings' revenue dropped 11.2 percent, to $30.8 million in the quarter from $34.7 million for the same time in 2009.

Revenues at the Riviera on the Strip dropped 16.2 percent to $20.5 million while revenues at the company's Black Hawk, Colo., property increased 1 percent to $10.3 million, the filing shows.

Property cash flow dropped 57 percent in Las Vegas to $1.4 million and in Colorado declined 23.9 percent to $2.5 million for the quarter.

Cash flow is reported as earnings before interest, income taxes, depreciation and amortization.

The Riviera Las Vegas' casino revenues dropped 15 percent, food and beverage revenues declined 8.4 percent and room revenues fell 18.4 percent.

The average daily room rate was reduced 19.6 percent to $55.69 per night. Hotel occupancy increased to 82.3 percent from 76.8 percent, but the percentage of rooms used by convention attendees slipped to 17.6 percent from 19.4 percent.

Rooms sold to convention attendees traditionally command a higher price than rooms sold to independent travelers.

Company stock traded up 13 percent Monday at 34 cents per share on the Pink Sheets.

The Stratosphere is owned by American Casino & Entertainment Properties. The fourth property in the area, the Sahara, does not publicly report its revenues.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.