The Stratosphere's owners said Wednesday that a planned renovation and a new thrill ride that is already drawing better-than-expected numbers should help bolster the property's performance as the economy recovers.
American Casino & Entertainment Properties will spend $20 million in room renovations and slot-floor improvements after July 4, Chief Executive Officer Frank Riolo said during the company's first-quarter earnings call.
The renovations will cover 909 of the property's 2,427 rooms and include new flat-screen televisions, bathroom floors and vanities, and new carpet and furniture. The beds were replaced last year. Much of the old furniture will be used at American Casino's two Arizona Charlie's properties.
The renovations could boost room rates between $7 and $15 per night, Riolo said. The property's room rates dropped 10.9 percent in the first quarter to an average of $43.39 per day.
Riolo said the Stratosphere's SkyJump thrill ride, opened in April, is performing above expectations with 70 to 90 jumps per day. SkyJump merchandise is generating 20 percent to 25 percent in additional revenue above the basic jump price of $100, he added.
"(The number of jumps) far exceeds expectations for the startup," Riolo said. "We actually don't have a fully trained crew and we're not open to the extent of the hours that we will be in the middle of the summer when we are in full operation."
The $1.1 million ride drops 855 feet from a platform above Las Vegas Boulevard to a deck just above the hotel's porte cochere.
The company hopes the new investments will help boost revenue numbers in future quarters. But in a filing with the Securities and Exchange Commission, American Casino posted a first-quarter loss of $2.7 million as revenues continue to decline across the company's Las Vegas properties.
The loss is wider than the $1.6 million loss posted a year earlier.
Revenues declined 6.3 percent to $87.8 million for the quarter ended March 31, down from the $93.7 million a year earlier.
Casino revenues for the company, which also owns both Arizona Charlie's and the Aquarius in Laughlin, dropped 6.1 percent to $55.9 million from $59.5 million. Hotel revenues dropped 7.3 percent to $13.9 million, and food and beverage dropped 8.6 percent to $17 million.
Cash flow, defined as earnings before interest, taxes, depreciation and amortization, slipped 4.5 percent to $19.2 million from $20.1 million last year.
Independent gaming analyst Frank Martin said while the drop year to year was not as severe as in 2009 when revenues fell 17.9 percent in the first quarter, concerns remain.
"The inability to stabilize revenue in the three Las Vegas properties means increasing challenges for the company," Martin said. "Also, the plight of the Stratosphere is indicative of the increasing challenges facing casinos on the north end of the Strip where gaming revenue can be decreasing even as it is increasing for the Strip as a whole."
Stratosphere's revenues dropped nearly 11 percent, the sharpest drop of any of the company's properties.
American Casino, which is owned by Goldman Sachs affiliate Whitehall Street Real Estate Funds, has $377.7 million in long-term debt, $375 million of which is secure notes maturing in 2014.
Contact reporter Arnold M. Knightly at aknightly @reviewjournal.com or 702-477-3893.