Finances improve for Stratosphere

Wednesday, May 15, 2002 | 11:04 a.m.

The Stratosphere hotel-casino reported a 23 percent increase in operating income for the quarter ended March 31, the result of a 1,000-room hotel expansion opened last June.

Operating income at the north Las Vegas Strip property, owned by financier Carl Icahn, rose to $2.77 million. Revenues increased 13 percent to $37.2 million, but net income declined 40 percent to $831,000.

The decline in net income was primarily the result of a 270 percent increase in interest expense, to $1.64 million. This increase came from interest paid on a $73 million loan from an Icahn-controlled company, used to complete the hotel expansion.

Hotel revenues saw the most sizable increase, rising 51 percent to $9.4 million. This increase came from the 70 percent increase in the Stratosphere's room inventory, but was offset by a 12.3 percentage point drop in average occupancy, to 86.2 percent.

Casino revenues rose 15 percent to $16 million, both from the room expansion and the expansion of marketing efforts built around the Stratosphere's slot club card. The increase was offset by a $600,000 loss taken by the sports book during the Super Bowl.

Food and beverage revenues rose 9 percent to $9 million, but tower and retail revenue dropped 14 percent to $1 million. The decrease came in retail revenues, which fell after the Stratosphere began cutting its rent in an effort to retain its mall tenants.