Stratosphere revenue up, profit slides down

Tuesday, Aug. 14, 2001 | 10:51 a.m.

Increased casino operating and promotional expenses reduced earnings for the quarter ending June 30 for Stratosphere Corp., owner of the Stratosphere hotel-casino and its 1,149-foot-tall tower in Las Vegas.

Stratosphere on Monday reported a second quarter profit of $237,000 or 12 cents per share, down from $1.2 million, 57 cents a share in the year-ago quarter.

Revenue of $33.5 million was up from $32.1 million.

The quarter-to-quarter results are not directly comparable because the 2000 quarter ended on June 25.

The weaker earnings were attributed to an 18 percent increase in casino operating expenses, from $7 million to $8.2 million, including higher payroll and slot lease expenses. The company also spent $400,000 more quarter over quarter in casino promotional expenses associated with direct marketing and the casino's Guaranteed Winners program.

The company also reported a 29 percent increase, from $2.5 million to $3.2 million, for more direct-mail promotions for the hotel-casino.

Food and beverage revenues decreased at the property from $9 million in the 2000 quarter to $8.6 million in 2001. The company said construction disruptions affected revenue levels at the hotel's buffet and coffee shop.

Tower visitation and ride admission revenues also were off, but revenue from leases in the retail shops was up for the quarter.

Company officials said marketing expenses at the hotel-casino are likely to increase as the company targets filling 1,000 new rooms that opened last month. The new rooms boosted the property's room count to 2,444.

Stratosphere said its average daily room rate fell from $50 in the 2000 quarter to $48 in the 2001 second quarter, though occupancy increased from 97 percent to 98 percent. The company said it expects its occupancy rate and room rates to decline now that the new rooms are open.