Mirage profits fall below estimates; Bellagio bookings strong

Gary Thompson

Tuesday, Aug. 4, 1998 | 11:27 a.m.

Mirage Resorts Inc. blamed bad luck and baccarat blues for a 28 percent drop in per-share earnings for the second quarter.

But the company tempered the bad news with a report that advance bookings for Bellagio, its $1.8 billion megaresort scheduled to open Oct. 15, are running twice as high as pre-opening reservations at Mirage and Treasure Island.

Mirage reported second-quarter net income fell to $33.6 million, or 18 cents a share, from $48.9 million, or 25 cents a share, in the 1997 period. Revenue fell to $322.9 million from $344.4 million, Mirage said.

The latest quarter's results were bouyed by a $5.2 million gain resulting from the sale of 16 acres to the Fashion Show Mall, which is using the land to expand.

The most recent per-share results, below analysts' estimate of 23 cents a share, were hurt by a 16.8 percent table-games win percentage. That win rate, down from a win percentage of 20.1 percent in the 1997 quarter, trimmed 4-5 cents from per-share net in the latest quarter, Mirage said.

It also said a 13 percent decline in baccarat activity cost about a penny a share. While the company blamed the drop on "highly publicized economic difficulties" in Asia, it claimed concerns about Far Eastern fallout "are often overrated."

Mirage said costs related to hirings at Bellagio and Beau Rivage, the latter the Biloxi, Miss., resort that's set to open Feb. 1, and an injury that forced cancellation of the Siegfried & Roy show during the quarter combined to cut another 2 cents from per-share net.

More than 56,000 application have been received and 27,000 interviews conducted for new jobs at the Bellagio, which will employ about 8,500, Mirage said.

Company-wide employment is expected to jump to 30,000 workers from 17,000 by the time Beau Rivage opens, it said.

At the company's flagship Mirage resort, operating cash flow -- or earnings before interest, taxes and depreciation -- fell to $38.8 million from $56.8 million in the 1997 quarter.

At Treasure Island and the Golden Nugget, operating cash flow as about the same as in last year's quarter, but fell 34 percent at the Golden Nugget in Laughlin. Company-wide, cash flow slid to $77.3 million from $96.8 million,

Mirage also said that since April 20 it has received more than twice as many reservations for rooms at Bellagio as it did for comparable pre-opening periods at Mirage and Treasure Island.

It said that, excluding convention and wholesale bookings, the average rate for rooms and suites $258. It didn't disclose the number of room-nights booked.

If room rate holds up, however, it may bode well not only for Bellagio but for other Las Vegas resorts owners counting on the new property to stimulate renewed growth in visitor volume.

In the face of slumping visitor trends and increasing room inventories, Mirage executives had lowered their room-rate projections to $140 a night -- far above existing averages but well below initial forecasts.

The $258 figure compares with a company-wide average room rate of $92 in the latest quarter, which was $3 lower than a year ago. The company-wide occupancy rate, though, crept up to 99.3 percent for the second quarter from 99.0 percent in the 1997 period.