Riviera reports narrower loss

Wednesday, Oct. 27, 2004 | 11:19 a.m.

Riviera Holdings Corp., which owns the Riviera hotel and casino on the Strip, narrowed its losses in the third quarter as the company's Las Vegas and Colorado casinos became more profitable. But high corporate expenses, including debt payments, kept the company in the red.

Riviera Holdings on Tuesday reported a net loss of $2 million or 57 cents per share compared with a loss of $3.2 million or 91 cents per share in the same quarter of last year.

The company is still working on a master plan for the Riviera Las Vegas that may include redeveloping the property at some point, Riviera Holdings Chairman and Chief Executive William Westerman said during a conference call Tuesday. The company will more likely develop the property in stages rather than blowing it up and building a new resort, which would cost more and halt cash flow for some time, they said.

The company also is continuing to explore new casino opportunities outside Las Vegas, executives said. Competitors beat out company bids over the past year to build casinos in New Mexico and Missouri.

New developments under way at the north end of the Strip, including Wynn Las Vegas, the Palazzo resort adjacent to the Venetian and several luxury condominium towers, will draw more foot traffic near the casino, Riviera Las Vegas President Robert Vannucci said.

"Recent land transactions on the Las Vegas Strip are indicators that our land has a fair market value well in excess of its $21 million recorded book value," he said. The company wouldn't speculate further about how much the 26 acres of land under the Riviera might be worth.

At the Riviera Las Vegas, profit rose 42 percent to $2.3 million and cash flow rose 13 percent to $5.7 million.

Hotel rates were about $59 per room, up 7 percent from last year. More rooms were paid with cash rather than comps, and convention customers -- 33 percent of rooms sold during the quarter -- paid an average of $84 per night.

Entertainment revenue at the Riviera rose 12 percent and the company sold 17,000 more cash tickets this quarter than the same quarter last year.

Gambling revenue fell 4 percent, driven by lower hotel occupancy and a greater number of convention customers who tend to gamble less, the company said.

The Riviera recently installed a slot machine monitoring system that will allow the casino to market more effectively to players by distributing direct mail offers and other promotions. The casino also is upgrading its slots to accept tickets over coins.

The company's other casino, the Riviera Black Hawk in Colorado, reported record gambling revenue, cash flow and market share for any quarter. The casino benefited from marketing programs aimed at growing slot revenue, while the economy in its primary feeder market of Denver also improved, executives said.

Revenue across the company rose 3 percent to $50.6 million. Cash flow rose 25 percent to $9.5 million. But interest expense of $6.8 million and other expenses of $45.8 million in the third quarter dragged down profit.

Casino revenue rose 1 percent to $27.5 million and hotel revenue rose 6 percent to $11.7 million. Food and beverage revenue was flat at $8.6 million and entertainment revenue rose 10 percent to $5.5 million.