Golden Nugget sees revenue slide in third quarter

By Steve Green

Tuesday, Nov. 10, 2009 | 9:40 a.m.

Revenue fell broadly at the Golden Nugget hotel-casinos in Las Vegas and Laughlin during the third quarter as the recession reduced visitation to the gaming destinations.

Owner Landry's Restaurants Inc. of Houston on Monday filed its third quarter financial report detailing results for its gaming and restaurant operations.

Compared to 2008's third quarter; casino revenue fell 8.5 percent to $32 million, room revenue fell 22 percent to $11.8 million as occupancy and room rates fell; and food and beverage revenue fell 13.3 percent to $10.8 million.

A bright spot was entertainment and other revenue, which rose 5.2 percent to $3.9 million thanks to increased ticket revenue from headliner entertainment.

After promotional allowances, net revenue from Landry's hotel-casinos totaled $52.4 million, down from $60.6 million in the year-earlier quarter.

Profit for the gaming group, excluding taxes, depreciation, amortization and asset impairment, was $7.6 million, down from $12.7 million.

Landry's is to be taken private under a Nov. 3 deal with Chairman and Chief Executive Tilman Fertitta.

On Nov. 20 it's opening its $150 million Rush Tower at the downtown Las Vegas Golden Nugget including a Chart House Aquarium restaurant.

The addition of nearly 500 rooms and suites to the property, lifting the room count to more than 2,400, likely will result in continued occupancy and room rate challenges for the property and competitors as the industry struggles to emerge from the recession.

At the competing Hard Rock hotel-casino in Las Vegas, for instance, 490 rooms opened at its Paradise Tower in July.

The Hard Rock's lodging revenue overall increased just $400,000 to $10.4 million in the third quarter as the increase in room inventory coupled with poor economic conditions drove the property's daily room rate down to $136 from $193 a year ago.

The Hard Rock's hotel occupancy of 89 percent in the 2009 quarter was down from 92.4 percent last year.

Overall for the quarter, Landry's earned $6.7 million or 42 cents per share vs. a year-ago loss of $17 million or $1.06 per share. Revenue of $276.6 million was down from $289.7 million.

"Operating income from the restaurant and hospitality group held up well in a very difficult economic environment. Results from the gaming operations reflect lower traffic compounded by heightened competitive pressure, particularly on room rates. We expect to open the new tower at the Golden Nugget at the end of November 2009, slightly in advance of the approximately 6,000 rooms opening in December at CityCenter," Chief Financial Officer Rick Liem said in a statement.

Overall, Landry's offered a cautious outlook in its filing Monday.

"The current economic conditions in the United States have continued to have a negative impact on our results of operations during 2009. A decline in discretionary spending attributable to tighter credit markets, increased unemployment, increased home foreclosures, the decline in the financial markets and other factors have impacted our customer’s level of spending on dining out, gaming, and tourism in general. It is difficult to predict how long the current economic conditions will persist, whether they will deteriorate further, and the extent to which our operations will be adversely affected,'' the company said.