Venetian turns a profit, announces gondola ride, other improvements

David Strow

Tuesday, Feb. 6, 2001 | 11:19 a.m.

The Venetian's strong business trends continued in the closing months of 2000, as the resort reversed the losses posted one year ago.

Meanwhile, Coast Resorts Inc. also reported a healthy jump in earnings, thanks to its new Suncoast hotel-casino and growing business at the Orleans.

Las Vegas Sands Inc., parent company of the Venetian, today reported net income of $5.1 million for the three months ending Dec. 31, compared to a net loss of $7.4 million in the year-ago quarter.

During the quarter, Las Vegas Sands posted cash flow of $49 million, up 35 percent from the year-ago quarter. Revenues rose 33 percent to $149.9 million. The Venetian is now the third-largest cash flow producer in Las Vegas, trailing only the Bellagio and the MGM Grand, said Las Vegas Sands President Bill Weidner.

"We really did it from a standing start," Weidner said. "We believe there's much more cash flow to be wrung from the property for it to reach its full potential."

Such numbers are not only good news for the Venetian, but for Las Vegas as a whole, said gaming analyst Andrew Zarnett of Deutsche Banc Alex. Brown.

"It backs up the market," Zarnett said. "Through the month of January, the datapoints look strong. If there's any sign of higher unemployment or lower consumer confidence ... we certainly haven't seen in Las Vegas yet.

"We were looking for $41 million (in cash flow), they did slightly above that. They're getting terrific room rates, they've been a consistent performer in Las Vegas over the past year."

The Venetian reported an average daily room rate of $197 in the quarter and occupancy of 94 percent during the fourth quarter. In January, ADR rose to $207, with an average occupancy rate of 98 percent.

"Based on currently available information, we feel comfortable that our group room business trends should remain strong even in the face of a slowing economy," Weidner said.

The Venetian hotel-casino posted cash flow of $43.8 million for the quarter, up 33 percent from the year-ago period. The increase came despite the fact that operating results were hurt by a lower-than-normal hold percentage at the Venetian's tables; higher handle enabled the Venetian to post a 33 percent increase in casino revenues, to $71.8 million.

Room revenues increased 27 percent to $51.8 million, while revenues from the Grand Canal Shops rose 18 percent to $7.7 million. Food and beverage revenues increased 36 percent to $17.6 million.

Such a performance should make it easier for the Venetian to raise funds for expansion, Zarnett said. On Friday, Las Vegas Sands Chairman Sheldon Adelson said he's planning to move forward with an 1,100-room expansion this summer, followed by a new 3,000-room development by early 2002.

"The fundamentals continue to be very strong, and the high-yield market is basically the best it's been in a long time," Zarnett said.

Venetian officials did not mention the possible expansion early in their earnings conference call this morning. However, they did discuss a number of renovations to the Venetian, including a doubling of the casino's baccarat pit, the renovation of 18 high-end suites and the addition of a concierge area.

The more visible addition, however, will be the addition of an outside gondola ride fronting Las Vegas Boulevard, to open in the next several months. Venetian officials also said they are in discussions to add two more nightclubs to the Venetian.

"We'd like to attract a (nighttime) crowd similar to Mandalay Bay and Hard Rock," said Venetian President Rob Goldstein.

Meanwhile, Coast Resorts turned in a strong performance of its own, reporting cash flow of $27.7 million for the quarter ending Dec. 31, a 31 percent increase over the year-ago quarter.

Revenues for the Las Vegas company increased 32 percent to $125.9 million. Net income was not specified in the earnings release.

The company attributed the gains to the Suncoast, which opened near Summerlin in September 2000. Coast also said it was helped by growing business at the Orleans -- a property Coast will spend $100 million expanding over the next two years.

Business was strong at other properties as well -- Harlan Braaten, Coast's president, said the Gold Coast had a record year in 2000, while Barbary Coast on the Las Vegas Strip enjoyed its best year since 1992.

"Clearly, (Coast) found a great new market in Summerlin ... and it's helped the company create diversification within the Las Vegas locals market," Zarnett said. "Overall, with the strong demographic growth (in Las Vegas), all these local competitors should continue to do better."