Las Vegas Sun

November 22, 2009

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Stratosphere owner narrows loss as revenue falls

By Amanda Finnegan (contact)

Published Friday, Nov. 13, 2009 | 9:21 a.m.

Updated Friday, Nov. 13, 2009 | 11:03 a.m.

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American Casino & Entertainment Properties, owner of the Stratosphere, reported a net loss today of $1.8 million during the third quarter of 2009, which improved from a net loss of $8 million in the same period of 2008.

The Las Vegas-based casino operator said net revenue fell 17 percent to $87.7 million in the third quarter of 2009 from $105.7 million in 2008.

American said in today’s Securities and Exchange Commission filing and during a third quarter conference call that its quarterly results were affected by overall declines in consumer spending and visitation to Las Vegas.

“The good news from the standpoint of Las Vegas is that nationally things seem to be improving from an economic perspective, which we hope will lead to increases in leisure travel and tourism,” American Casino & Entertainment Properties President Frank Riolo said, looking forward into the fourth quarter.

The company, which owns the Stratosphere, Arizona Charlie’s Boulder and Decatur and Aquarius Laughlin, said occupancy at the four properties plunged from 82.6 percent in the third quarter of 2008 to 69.5 percent in 2009. Average daily room rates fell to $44.75 in 2009 from $50.70 in 2008.

Occupancy at the Stratosphere fell to 93.2 percent during the third quarter of 2009 from 97.1 percent in the comparable period of 2008. Average daily room rates fell to $43.77 from $57.42.

Like other casino operators in Las Vegas, American said it is expecting an increase in competition with the addition of CityCenter.

“The increase in supply is certainly going to have an effect on the market,” Riolo said. “Jim Murren, who claims to have more information than anyone out there, says we are going to see an increase in visitation. We’ll have to wait and see.”

Arizona Charlie’s Decatur saw the biggest drop in occupancy as numbers plummeted from 90.2 percent in the third quarter of 2008 to 44.7 percent in the same period of 2009. While occupancy declined at the property by nearly half, room rates remained relatively flat at $47.

The company said it has no plans on changing strategies at its Arizona Charlie’s properties but is instead focusing on maintaining its existing customer base.

In a cost saving initiative, American said it trimmed full-time staff by 14.8 percent during the third quarter of 2009 to 3,647 compared to 4,282 during the same quarter last year. The company said it also implemented changes in scheduling and benefits and eliminated certain positions, reducing labor costs by 11 percent to $40.8 million during the third quarter of 2009 from $45.9 in the same period of 2008.

Discussion: 11 comments so far…

  1. By neiman1
    11/13/09 at 9:31 a.m.
    Suggest removal

    When the best news we can report is the losses are not as bad as they were last quarter it's not good for the city.

    Thanks a lot harry Reid. Your years in charge of the Senate have been just miserable.

  2. By stratboy
    11/13/09 at 10:59 a.m.
    Suggest removal

    We loss less!!! YEAH YEAH. They didn't cut my full time position, however, I am thinking about giving it up so I can save the company money.

  3. By American_Gaming_Guru
    11/13/09 at 11:40 a.m.
    Suggest removal

    It is amazing they lost so little. American Casino & Entertainment Properties aka Goldman Sachs over-paid for those assets. I hope all those cuts that they made do not further erode business.

  4. By logic_should_rule
    11/13/09 at 11:59 a.m.
    Suggest removal

    Do any of you expect a profit in this climate? A small loss in those low rung properties is pretty impressive.

  5. By burnemandturnem
    11/13/09 at 2:26 p.m.
    Suggest removal

    As another current Strat employee, I can say with assurance that staffing levels on the hotel side are so lean now that morale is rock bottom and guest service varies anywhere from mediocre to abysmal. The current owners (Whitehall REIT, managed by GS) paid way too much at the top of the market and saddled themselves with a lot of debt. Sadly, things will not get better there anytime soon, and the current management team doesn't seem to know what to do about it except to plod along and grind the staff into dust.
    Several months ago I'd read in the WSJ that there were talks to let Whitehall off the hook for some of the debt load in exchange for an equity stake for some of the creditors. Don't know what came of it, if anything.

  6. By BorisR
    11/13/09 at 5:26 p.m.
    Suggest removal

    When they cut costs, does it mean they shut down the cool Friday night disco music lounge and also cut down on the good videopoker? or does it mean the buffet quality was cut in half?

  7. By stratboy
    11/13/09 at 7:04 p.m.
    Suggest removal

    It means they closed the images lounge thad had excellent bands wend-sun for no cover or drink min. I've seen business during the swing shift I work decrease big time. However they do have live music in the new back alley bar located in the far rear desolate corner of the property instead of located in the heart of the Casino where the main action should be but isn't. Then all these fluff positions where added to give friends a job.

  8. By OPechanga
    11/14/09 at 9:56 a.m.
    Suggest removal

    We were at the Strat a couple of weeks ago and had a good time. We won a little money and we had dinner in the coffee shop.

    The food and service were pretty good. Of course there are better places, but hey, we gamble a little cheaper when we don't have the funds. Any employees should be telling all their friends to go to the Strat. JOB SECURITY? Anyone, Anyone?

    It won't take too many friends to make up the deficit... start now.

  9. By manfromuncle1
    11/15/09 at 11:50 a.m.
    Suggest removal

    Burne: re your comment on low staffing levels at the Strat. I work at a big box store in L.A. and our staffing is pretty bare-bones also. Last week they said that we missed our sales target by $80,000 (for the week) and we are now over budget on our payroll by 800 hours (that's for the month). That's the equivalent of the entire nighttime sales floor crew for a whole week. They can't eliminate the night crew for a week but I am bracing for the loss of more hours. So what do they tell casino employees at the daily meetings with the managers? How are you guys trying to push sales? lol

  10. By environprotector
    11/16/09 at 2:10 p.m.
    Suggest removal

    The Strat is screaming for the proper management which understands how to make this very unusual property balance financially. The idea of this place first and foremost is a trip to the top for the best view your gonna find west of the Mississipi. With that in mind, that's where the effen casino should be! Can't think of a better draw into a casino than that what this place is all about! The view. PUT THE CASINO IN THAT ROTATING AREA AND MOVE THE REST DOWN A LEVEL !! How hard is it to use your imagination?

  11. By BorisR
    11/17/09 at 10:12 a.m.
    Suggest removal

    sounds like a great idea. however, it was so stupid last time when I tried to hop on the elevator to the TOP and then this airport style security check-point just wouldn't stop beeping around, indicating that I was carrying some hand granades, C1, or some machine guns, which of course, I did not. My trip to the top ended before I could even enter the elevator as I finally refused to undress. The beeper just continued and I had to remove more and more items. it was just ridiculous. Hard to imagine that they can get away with it and what's the idea behind this security measures. i dumped my ticket and returned to the poker room where I got lucky and won the money for the elevator ticket back in less than 10 minutes and was out of the casino shortly after that.

    A poker room at the TOP would be the absolute climax of all casino experience. However, it is questionable that the restaurant ownwers would agree to give up their rights on the location. Which is definetely most exciting and gives us the best view of the city.

    Greetings from Switzerland

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