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Hard Rock reports revenue increase

Heavy debt that gaming companies ran up during the good times continued to weigh on a couple of gaming companies, according to earnings reports released Monday by Riviera Holdings and the Hard Rock Hotel.

The Riviera’s parent company and the Hard Rock both posted losses for the third quarter as Las Vegas continues to struggle with decreased customer spending and visitor numbers.

The Hard Rock, however, posted its first increase in revenues in seven quarters thanks to late July opening of the new 450-room Paradise Tower.

The niche property posted a net loss of $22.3 million in the third quarter ended Sept. 30, a filing with the Securities and Exchange Commission shows.

The latest earnings widened the property’s loss for the first nine months to $70.1 million, up from $57.4 million.

Riviera Holdings Corp., which also owns a casino in Colorado, posted a net loss of $4.7 million, or a loss of 38 cents per share, for the quarter. The loss is an increase from a $3.5 million loss, or a loss of 28 cents per share, posted the same time last year.

Riviera Holdings saw its loss increase to $19.2 million for the first nine months of the year, compared to the $826,000 profit posted through September 2008.

Both companies’ quarterly losses were driven by interest expenses on debt: $19.3 million in interest expenses on the Hard Rock’s $1.16 billion debt and $3.6 million in interest expenses on Riviera Holdings’ $227.5 million debt.

Riviera Holdings, which has multiple defaults on its debt, said it was continuing to talk with its creditors about restructuring its debt, possibly through bankruptcy.

On the revenue side, however, it is a tale of two properties seemingly headed in opposite directions.

The off-Strip Hard Rock posted a revenue increase of 6.8 percent to $48.9 million in the quarter. The increase was due to a 4 percent increase in hotel revenues and a 24.7 percent increase in food and beverage sales. The food and beverage revenues were up largely because of the expanded The Joint concert hall and 60,000 square feet of new convention space that opened in the second quarter.

Hard Rock’s revenues for the first nine months of the year, however, decreased 7 percent to $126.1 million.

Riviera Holdings’ revenues dropped 13.9 percent in the quarter, driven by a 25.1 percent drop in revenues at the 2,075-room Riviera on the Strip.

The company’s revenues fell 22.3 percent to $103.9 million the first nine months.

The Hard Rock Hotel is 85.9 percent owned by private equity firm DLJ Merchant Bank Partners, an affiliate of Credit Suisse. New York-based boutique hotel company Morgans Hotel Group Co. owns the remaining share and manages the property.

Riviera Holdings’ shares were down Monday morning by 2 cents per share to 58 cents on the Pink Sheets.

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

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