Trop parent misses expectations

Thursday, Oct. 21, 2004 | 10:58 a.m.

Profit at Aztar Corp. fell 22 percent in the third quarter as the company continues to recover from a construction accident last fall that has delayed the opening of a major expansion at its Tropicana resort in Atlantic City.

The company, which also owns the Tropicana in Las Vegas, still reported higher returns at its Las Vegas and Laughlin casinos and a 100 percent occupancy rate in Las Vegas.

Phoenix-based Aztar reported third-quarter profit of $13.2 million, or 36 cents per share, compared with $16.9 million, or 46 cents per share, in the third quarter of last year. Analysts had expected to company to earn 41 cents per share.

During a conference call with analysts Wednesday, Aztar President and Chief Financial Officer Bob Haddock said the company still won't decide on whether to redevelop the Tropicana Las Vegas until the first quarter of next year. The company may also redevelop part of the planned resort project with a joint venture partner, he said. Regardless of those plans, the company intends to hold onto the property rather than sell the land in the wake of soaring real estate prices on the Strip, he said.

Aztar expects to open its Tropicana Atlantic City expansion sometime after Nov. 9, when a new parking garage is expected to be complete. The expansion includes a 502-room hotel tower and a 200,000-square-foot dining, entertainment and retail area called The Quarter. Last fall the parking garage under construction collapsed, killing four construction workers and delaying the project while it was inspected. The company has filed for but hasn't received $5.8 million in business interruption insurance claims for the third quarter.

The Quarter is a Havana-themed area that emulates Las Vegas-style retail areas and is aimed at helping to transform Atlantic City from a daytripping slot haven into a resort destination with restaurants like P.F. Chang's and Red Square.

The company is now contending with a bitter labor dispute involving Local 54 of UNITE HERE, which is affiliated with the Culinary Union in Las Vegas. The strike, which affects three other casino companies in Atlantic City, involves some 10,000 hotel and restaurant workers at more than half of the city's casinos.

Aztar Chief Executive Paul Rubeli said Wednesday the company wouldn't comment on the strike other than to say he agreed with a statement by Atlantic City competitor Harrah's Entertainment Inc. that Harrah's wouldn't give in to the union's demands for a three-year contract. Atlantic City workers now have a five-year contract but want a contract that would expire at the same time as Las Vegas casinos.

Rubeli declined to comment on allegations that the Tropicana is hiring temporary workers to replace striking employees as well as the financial effect of the dispute.

Aztar's cash flow -- a key indicator of casino performance -- fell 5 percent to $46.4 million. The company also owns the Ramada Express in Laughlin as well as Aztar brand casinos in Caruthersville, Mo., and Evansville, Ind.

Revenue at the Tropicana Las Vegas increased 4 percent to $41.1 million and cash flow jumped 26 percent to $8.8 million. Occupancy was 100 percent compared with 97.8 percent a year ago and the average daily rate rose $3.24 to $73.88.

Revenue at the Ramada Express rose 5 percent to $21.8 million and cash flow rose 30 percent to $4.3 million. Occupancy fell 6.6 percentage points to 67.9 percent and the average daily rate rose $4.37 to $33.76.