New hotel tower boosts revenue for Stratosphere

David Strow

Tuesday, Nov. 13, 2001 | 10:42 a.m.

The Stratosphere's new 1,000-room hotel tower helped push the Las Vegas Strip property's revenues up in the quarter ending Sept. 30, despite a citywide slowdown in tourism.

The Stratosphere, majority-owned by New York financier Carl Icahn, reported revenue of $40.1 million for the quarter, a 27 percent increase over the year-ago quarter. The property eked out just $29,000 in net income, down from $678,000 in the year-ago quarter; however, this was the result of more than $1.4 million in new interest expenses.

Operating income was up 42 percent to $1.44 million.

Of all the Stratosphere's businesses, the only one to show a decline as a result of the Sept. 11 terrorist attacks were tower and retail revenues, which include ticket sales to the Stratosphere Tower's observation deck, its rides and its restaurants. Visitation to the tower fell 13 percent to 475,000 during the quarter, something the Stratosphere blamed squarely on the Sept. 11 attacks.

All other businesses showed marked improvement. Casino revenues rose 37 percent to $17.5 million, hotel revenues increased 60 percent to $9.6 million and food and beverage revenues were up 15 percent to $9.8 million. In each case, the Stratosphere said the new 1,000-room hotel tower, opened in July, played a factor in driving business up. The tower increased the Stratosphere's room inventory by 70 percent.

Other factors increasing revenues were a higher-than-normal table game hold, a new slot club program, and six extra days in this year's third quarter (the year-ago third quarter ended on Sept. 24).

Despite the improved numbers, the Stratosphere said its September and October revenues were hurt by the post-Sept. 11 slowdown.

"Management still expects casino, hotel, food and beverage, and entertainment revenues to increase through the second quarter of 2002 because of the hotel expansion," the company's quarterly report said. "However, the increase during this period and revenues for the foreseeable future may be muted by the decreased air travel to Las Vegas because of the terrorist attacks."