Stratosphere owner sees loss in second quarter

By Steve Green

Tuesday, Aug. 4, 2009 | 9:40 a.m.

The owner of the Stratosphere offered low room rates to nearly fill the 2,444-room Las Vegas property during the second quarter, but room occupancy was weak at three sister hotel-casinos.

The lower hotel revenue at the Stratosphere, two Arizona Charlie's in Las Vegas and the Aquarius in Laughlin contributed to an $844,000 loss for American Casino & Entertainment Properties LLC in the quarter, ACEP disclosed Monday.

Because of lower financing costs, the results were an improvement from the $2.2 million lost in 2008's second quarter.

Factoring out the decline in interest costs, income from operations tumbled 35.7 percent to $9.9 million for the 2009 quarter.

And net revenue during the quarter of $94.2 million was down from $110.6 million in 2008's second quarter.

The recession reduced travel by Americans during the quarter, hurting the Stratosphere and Aquarius; while high unemployment and foreclosure levels in the Las Vegas area reduced gambling by locals at Arizona Charlie's Decatur and Arizona Charlie's Boulder.

The company said room occupancy totaled 95.5 percent at the Stratosphere, where the average daily room rate was $44.93.

The 258-room Arizona Charlie's Decatur turned in an occupancy rate of just 55 percent at an average rate of $50.24. The Boulder Highway Arizona Charlie's filled 52 percent of its 303 rooms at an average rate of $39.35, while occupancy at the Laughlin property was 47.7 percent at an average rate of $48.53.

ACEP said casino revenue fell 16.1 percent to $55.9 million during the quarter while hotel revenue fell 25.7 percent to $16.2 million.

Overall room occupancy fell from 84.4 percent in the 2008 quarter to 72.1 percent in the 2009 quarter, while the average daily room rate fell 16.6 percent.

ACEP has responded to the economic slowdown by cutting costs, reducing the number of full-time equivalent positions in Las Vegas and Laughlin as of June 30 to 3,708, down 13.7 percent from the June 2008 level.

Compared to the 2008 quarter, job reductions and other measures cut the company's payroll costs by 10.9 percent during the 2009 quarter to $40.1 million.