Riviera loss widens

By Liz Benston (contact)

Tuesday, Feb. 10, 2004 | 11:26 a.m.

Losses at the parent company of the Riviera hotel-casino widened in part because the company won less from gamblers in Las Vegas and spent money on a successful effort to defeat a referendum that would have legalized slot machines at race tracks in Colorado.

Riviera Holdings Corp., which also owns a casino in Black Hawk, Colo., today reported a loss of $6.7 million in the fourth quarter compared to a loss of $3.9 million in the same period a year ago. On a per share basis, the company lost $1.93 compared to $1.13 a year earlier.

Revenue at the Las Vegas casino rose on improved slot play and room revenue, however, executives said.

"The additional convention space at the Las Vegas and Mandalay Bay convention centers has enabled the city to attract and book new conventions that may have had date and exhibit space conflicts in the past," Riviera President Robert Vannucci said.

The Riviera has benefited from its proximity to the Las Vegas Convention Center, which has enabled the company to book more small meetings and conventions, he said. The Las Vegas economy continues to recover, with visitation, hotel occupancy and conventions up from a year ago, he added.

Revenue at the property rose 3.9 percent to $33.3 million as all departments except for table games showed increases, Vannucci said. Slot revenue rose 8 percent, convention room nights were up 23.8 percent and room occupancy rose 4.3 percentage points to 86.5 percent. The average daily rate per room rose $1.20 to $62.31.

Cash flow at the property fell 4.7 percent to $4.2 million. A variety of factors including a lower than normal amount won from blackjack players, increased union benefits and higher health care and energy costs resulted in the cash flow decline, Vannucci said.

Revenue at the Riviera Black Hawk rose 3.9 percent to $45.4 million. But cash flow at the property fell 6.7 percent to $3.2 million. The company charged $339,000 during the quarter for a campaign to defeat a referendum to legalize race track casinos in Colorado. Casino revenue at the property rose 3.7 percent while the entire market declined 2.1 percent over the same period, property President Ron Johnson said.

Riviera wrote off $2.4 million in costs related to a proposal to build a racino in Hobbs, N.M. as well as other development expenses. The New Mexico Racing Commission in November instead selected New Mexico track owner R.D. Hubbard and his business partners for a license to build and own a race track casino near Hobbs.

The company is seeking other opportunities to expand into new markets and is now focused on its proposal to build a casino in Jefferson County, Mo., which is in the bidding process, Riviera Board Chairman William Westerman said.

"In spite of the New Mexico setback, the significant contribution of Black Hawk to our shareholder value reinforces our effort to diversify into new venues," he said.

Last week Atlantic City casino boss Donald Trump gained preliminary approval from Nevada regulators to buy 10 percent of Riviera's stock. Trump said the move would position him for further investments in Las Vegas and said the Riviera "will be a strong company in the years to come."