Slowdown, terror take toll on LV Riviera

Tuesday, Feb. 12, 2002 | 11:14 a.m.

Riviera Holdings Corp., owner of the Riviera hotel-casino on the Las Vegas Strip, today reported a fourth quarter loss of $3.2 million or 92 cents per share vs. a loss of $2 million or 53 cents in the year-ago quarter.

Revenue of $44 million was down from $49.5 million as tourism to Las Vegas slowed because of the weakening economy and the Sept. 11 terrorism.

Income from operations for the quarter was $2.2 million, down $1.3 million from the fourth quarter of 2000.

Cash flow or EBITDA -- earnings before interest, income taxes, depreciation, amortization, pre-opening expenses and other income and expense, net -- for the quarter was $6.5 million, down $1.6 million from the fourth quarter of 2000.

In the fourth quarter, Riviera Black Hawk in Colorado contributed $3.7 million in EBITDA, an increase of $1.8 million from the fourth quarter of 2000. That casino mainly serves the local Colorado market.

But the terrorist attacks, the slowing of the national economy and rising marketing costs resulted in a $3.4 million decrease in Riviera Las Vegas EBITDA Riviera Las Vegas' occupancy decreased from 91.6 percent in the fourth quarter of 2000 to 78.4 percent in the fourth quarter of 2001, though the average daily room rate increased $1.11 to $64.00 during the fourth quarter.

"Net revenues in Las Vegas were down $8.5 million or 21.4 percent for the quarter across all departments," said Bob Vannucci, president of Riviera Las Vegas. "Slot machine coin-in or volume decreased 17 percent for the quarter and win decreased a corresponding 15.5 percent. Our margins in Las Vegas were pressured by the slow down in the economy even before the Sept. 11 terrorist attack. We are spending more marketing dollars to increase demand and we believe we will have to continue to focus on our incentive programs through the rest of the year and into 2003."

"The booking window for most of our business segments is 60 to 120 days out. As a result, the period after Sept. 11 resulted in significantly lower bookings for November and December 2001. Our customers arrive primarily by air, as our Southern California base is less than 15 percent of our occupancy," he said. "Our primary focus before Sept. 11 was on customers living in the eastern United States. We increased our gaming marketing expenditures to protect and to continue to grow our loyal slot customer base. We increased our room marketing efforts to concentrate on customers in the western United States, and we believe these efforts will be successful beginning in February 2002, based on the pace of advance bookings.

"Call volumes, booking patterns and occupancy began to normalize in mid January. We had an excellent Super Bowl and expect occupancy increases for February and March. Although we see recovery on the weekends, the midweek occupancy rates vary significantly from day to day primarily due to competitive pressures," Vannucci said.