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twitterPlanet Hollywood’s financial outlook worsens
Resort says lenders control its finances as property reports $17.5 million loss
Justin M. Bowen
The Planet Hollywood resort on the Las Vegas Strip.
Monday, Nov. 16, 2009 | 2:42 p.m.
The owner of the 2,518-room Planet Hollywood hotel-casino on Monday reported another quarterly loss and disclosed that its lenders are now in control of its finances.
BH/RE LLC, the Las Vegas Strip resort's parent company, said that for the quarter ended Sept. 30 it lost $17.5 million vs. a loss of $10.7 million in the year-ago quarter.
Revenue fell 20.6 percent, from $69 million to $55 million, as Planet Hollywood's casino accommodated fewer players and the hotel had to lower room rates to stay competitive as the recession reduced visitation to Las Vegas.
Even as the average daily room rate fell year-over-year from $123 to $99, hotel occupancy decreased 3.9 percentage points to 91.1 percent.
Compounding the problem, 14,748 more room nights were available during the 2009 quarter because of a room renovation project that was under way in the 2008 quarter.
With Harrah's Entertainment Inc. buying a reported $140 million of its debt during the quarter, raising speculation that Harrah's is interested in the property, Planet Hollywood reiterated that it has defaulted on its debt obligations totaling $870 million.
The default occurred on Sept. 9 when Planet Hollywood did not have sufficient cash available to make interest and reserve payments due that day on an $860 million mortgage, which has been syndicated and is serviced by KeyBank Real Estate Capital.
Because of the default, the resort and the lending group entered into a "protective advance agreement" that outlines conditions for the lenders to make cash advances to the resort so it can continue operating.
"The company is continuing discussions with the lender in this regard," BH/RE said Monday in its quarterly financial report.
"Under the terms of the loan agreement, all cash receipts are deposited into a cash management account under lender control which is used to fund reserves and operating expenses. In accordance with the terms of the protective advance agreement, operating funds are disbursed to the company at the lender's sole discretion," BH/RE said.
With entities controlling Planet Hollywood restricted from filing for bankruptcy, the company said it's "involved in discussions with the lender that could result in a foreclosure on the property and a transfer of the deed, a transfer of a portion of some or all of the current equity of the company or a modification to the loan."
"There can be no assurance that an agreement will be reached with the lender, that the lender will not exercise its rights to obtain ownership of the Planet Hollywood Resort, will agree to modify the loan agreement or will make adequate funds available under the protective advance agreement," BH/RE said.
With CityCenter set to open across the street, Planet Hollywood did not offer an optimistic outlook for the rest of the year.
"We believe that third quarter 2009 operating results were negatively impacted by the current market conditions and that we will continue to experience lower than historical hotel occupancy, room rates and casino volumes throughout 2009. As a result, we have increasingly focused on efficiency initiatives to control expenses and improve performance. We are continually reviewing the costs and marketing opportunities to ensure maximum operating performance in the face of the current economic conditions," the resort said.
Discussion: 39 comments so far…
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Oh but CityCenter is going to fix everything!
See 'er Later!
.
..
...One of Planet Hollywood's negative impacts of the third quarter was parading that goofy Holly Madison all over God's Creation..
...When City Center opens and all those money chieftains from Abu Dabi, Kuwait, Bahrain and points Mid-East start hitting the strip, Planet Hollywood may wish they stayed with the Haji Baba theme..
..
...Temujin... Khan of the Yakka Mongols..
..
.
It's clear that this property is cursed. Nothing will ever succeed here.
I agree with observer, this property has never made money under any brand at any time with any management. I have no answers, I just know I it has never been successful.
Self explanatory: PH's slot machines are tight. Limited perks/comps from their player's card.
Just wait until City Center opens and they all split the little pie in smaller pieces.
the restaurant stunked when it was 1st introduced, why should they be any better at a casino
the only thing that will save the city is drugs and sex. Nude waitresses, comp pot for players, and legal prostitution.
Its a good location and they should be able to get it work. It seems that half of the building is retail stores so there really isn't much gambling floor space. I would think a casino would want to have as much floor space as possible dedicated to gambling. It is also an easy walk to other casinos so they need to make sur etheir guests are not walking out the door to gamble somewhere else while they are paying low room rates at the PH.
lol!
didn't we JUST get a "news article" last night about how the strip was rebounding?
ya, ok.
The original business which opened on this site was a non gaming Hotel called The Tally Ho back in the late fifties. It failed almost immediately with no gaming to back it up. Along came Milton Prell with his first incarnation of The Aladdin which limped along, whose only claim to fame was Elvis wed Pricilla there. The property never made any money. Along came the new Aladdin in the seventies with Wayne Newton at the wheel only to nose dive and give way to corrupt mob types and foreign owners who raped the place. Finally in the late nineties they ripped it down and built this new behemoth and even with what I felt to be a pretty cool shopping mall, made the mistake of horrible parking and casino access from the sidewalk as well. I do believe that there is some kind of curse on this property.
All these sad articles.....
Planet Hollywood in trouble, Hooters in trouble, Hilton in trouble.....Station Casinos in trouble....
New casinos/hotels construction projects ON HOLD...
Less flights to Vegas...
Gambling revenue down....
Very sad for me to read. I am a huge fan of Las Vegas and I want to come back out there so bad. My wife and I got married there in 2005 and have visited 9 times since. I have a special place for Las Vegas and I hope everything gets better.
Question - how are the Fremont properties doing? Is Fitzgeralds/Four Queens/Plaza/etc. doing OK? I would figure they would be doing better than the Strip properties since they appear to cater to the lower budgeted gambler/spender (like me).
Thanks for reading.
P.S. RIP Stardust (my favorite). Seems like since the implosion, things haven't looked the same. Both financially and literally.
domenicricci1@gmail.com
Wynn isn't in much better shape....it will come out some time...he can't Fudge his Books forever !!! Stardust was my favorite too !!!
No other property in Las Vegas really defined Las Vegas like The Stardust. It was simply the most exciting, happening, old school place in town. What also made it great was it's great companion properties which surrounded it, like The Frontier, Desert Inn, Algiers, Circus Circus, Slots O Fun, Riviera, La Concha. You could spend the entire night just running back and forth between all these places by foot, and be having the time of your life! All gone now, just empty lots with partial construction, a real graveyard.. Shame..
I do feel bad for all the people without jobs in Vegas, but what is happening now is not terribly surprising. The last ten years + have been spent acting like bad times never happen - well, they do. While Vegas has always had a reputation as being recession proof, let's face it, that was a different Vegas than what we have over the past few years. It succeeded during down economic times because you could do Vegas on the cheap. That's what is keeping it afloat now, but it isn't terribly profitable.
This IS the new Vegas - Two years from now things are going to look a lot different - some names we know are just going to go away. I think several years are going to pass before we start hearing about new projects again. It's going to take time to use what we have.
Solution:
1) Close it down and rename it Planet Stardust.
2) Make David Bowie headliner: Ziggy Stardust.
SMART, VERY SMART. LISTENING GARY LUGMAN?
this is really a shame.we really enjoyed staying at planet,as we visited several times a year and played there quiet a bit.over the last year comps got tighter,service got worse,the associates got more snobbish an acted as if you were annoying them by being there even their exec hosts could care less if you stayed with them or not.there are other casinos with much better attitudes.we are very happy with all of HARRAHS properties.
That location has been a dud since the Alladin days. Too far North to catch MGM overflow, Too far South to catch the few who venture past Bally's (old MGM). CC may actually help this one! I miss the Stardust too.....and the Sands.....and Westward Ho......and.....the Frontier.....
All replaced by either half built scrapyards or BORING Bellagio, Pazzoola (or whatever it's called), Venetian, etc....lookalike overpriced places.
IS IT TRUE THAT NOT ONE of these joints put ONE DIME away for a rainy day?
IS IT TRUE THAT they all did the rip-out-as-much-profit-as-you-can gig and the what-we-can't-earn-we-can-borrow-to-build gig?
ZOWWEEE! IS IT TRUE THAT the Execs at MGM paid their best pal "preferred" real estate agents 11 MILLION DOLLAR$$$ UP FRONT in juicy commi$$ion$ for City Center out of the deposit money?
(Here's SUN article on that one): http://www.lasvegassun.com/news/2009/nov...
IS IT TRUE THAT whoever does all this financial flopster-ing, can stay in business...?
IS IT TRUE? IS IT TRUE? IS IT TRUE?
As it pertains to Planet Hollywood, the old adage of putting perfume on a pig comes to mind.
This will be Harrah's soon. Good for the strip and will keep Jobs.
Any of you geniuses had a job that pays more than $12 per hour in the last 10 years? You do anything positive, or just sit at the computer and make "I told you so" comments all day?
well, JLOKC...i think we're just smart enough to smell the "perfume on the pig" that all the p.r. types are pushing.
this town is done. and the more we have the "vegas is recession proof", the worse it's going to get.
i actually really liked the aladdin to be honest. it had cool colors and some neat stores at the mall, and a GREAT buffet that i used to hit once a month, and i loved trader vic's, but no matter how many times i'd go there, the parking / circular layout was always tricky.
I went to PH last year to see "Scarlett Princess of Magic". This year PH and the rest of Las Vegas is going to be destroyed when City Center releases a hurricane of empty hotel rooms on the Strip. For an accurate depiction of what the Strip is going to look like, check out this "2012" clip of Vegas being destroyed.
http://www.youtube.com/watch?v=A7jYLvKsw...
One of the main problems is the layout of the property after they rebuilt. They should have torn down the Theater for the performing arts when they imploded the first Aladdin.
Great, welcome to Planet Harrah's! Harrah's bought a huge chuck of that debt a few months ago. Best Thing Criss Angel did was leave that dump. Since the Strip lost it's soul when Wall Street took over LV Strip, people should be flocking to downtown to gamble (Vegas' best kept secret).
JLOKC : Your comment criticizing what is being discussed here is fine, however you offer no input to the discussion. Why not tell us what you propose to be the state of things, or offer a solution. I used to make 40 dollars an hour for the past twenty five years, until I was layed off last February. What does an hourly wage have to do with anything ? What positive things have you done? or do you just sit at your computer and be critical of others who have something to offer to the discussion?
To Penn Gaming. U are about to make a terrible mistake buying the money pit white elephant called Fountainbleu. It will be a boarded up eyesore for years just like the Landmark and El Rancho were last century. Instead you could purchase a fully staffed and operational casino with an existing database that could be merged to your own. Its called Planet Hollwood and would be exactly the kind of midmarket hotel resort that you are seeking as your first entry on the strip. It would cost a fraction of what FB would cost just to get up and running let alone finished. And you would be doing a public service by not letting yet another good property fall into the cluches of Harrahs.
We all know what a shambles they made of the old Caesars/Hilton group properties and would just bleed PH to death also. That the gaming board would even consider letting debt soaked Harrahs aquire and wreck yet another strip casino is an outrage. The boards of both NJ and Nevada should be ordering Harrahs to sell off it assets not swallow up new ones.
I glady quit Harrahs to go work for PH shortly before its grand opening and found it to be a much smaller and more friendly property unlike Harrahs which treats its employees like paper clips and was constantly cutting hours and benes long before the economy collapsed. Sadly when the bottom fell out, I along with hundreds of coworkers was laid off in a mass firing. Now read that PH is plaugued by the same problems of understaffed overworked employees which affects, morale, attitude, and cleanliness. Thats what happens when the housekeeping and maintenance staff is cut nearly in half like PH did. But at least they tried improving the mess that was Aladdin fixing the front plaza and casino layout. Of course some construction flaws from the old Aladdin can never be fixed such as far away parking, cheap plumbing etc. PH took out the corporate equivlant of a home equity loan to pay for its renovation during boom times only to watch the value of its property plunge just a year after it was done when the bill came due. Sad state for yet another Strip casino. Still hope anyone but Harrahs will get control of it.
And here I was thinking the Aladdin was torn down just because the Arabian Nights theme was too worrysome for you guys. Planet Hollywood my butt!! It wasn't even a good rebranding effort!
I miss the old Aladdin, it held a special place in my heart as it was the first place me and my hubs stayed a good 15 years ago. It was kitchy, it was fun, had loose slots and an old school friendly atmosphere. I still remember looking North on the strip from our 16th floor room with those ridiculous floor to ceiling gold windows. PH is nothing special, doesn't stand out one bit, it's like another version of the Palms, only not as cool. It's a shame really. And now Harrah's can and will slowely move in for the kill. Shame.
I think the term is "lipstick on a pig"
the suits have taken all the profit out of the casinos and have enhanced their personal assets to the max. the disaster they left behind is starting to show up with casinos no longer the cash cows they once were.
Anyone who thinks CC will benefit any other casino is just plain wrong. First there won't be enough "flow" at CC to create any "overflow" and if there was they certainly won't be headed to PH. This would be funny if it wasn't so sad. Vegas...not missing it.
The Planet Hollywood theme was never a good one to begin with. I often associate it with lousy tourist food and a company that over-expanded and went BK. On the other hand Earl did a nice job renovating and repositioning the place. What was unfortunate was the faults with the last Aladdin took a lot of additional capital to cure. After Earl and Co bought the place out of BK, for a very attractive price, they plowed too much additional capital into the place to re-theme and cure the Aladdin faults. Now here comes Harrah's with an Arthur Goldberg move to buy the place buy gobbling up its debt on the cheap. It is a smart move that may eventually bring Vegas its first "Horseshoe" on the strip. A legendary name in gaming right across the street from an iconic new one...that would be fun.
The Horseshoe....LOL...Good one & would most likely occur...It would also take the World Series of Poker and place it back at the Horseshoe...*LMAO*
Oh if wishes and dreams could fly....how high we would be.... Leverage is the crack cocaine of aspiring empire builders...especially when rewards are based upon the fiction of quarterly financial reporting....PH is simply another member of the new norm in Vegas business (or rather was)...and Wall Street is the nuclear rat who will prevail forever.
The problem is very simple"I love Vegas...but its been raping people for years now" its ridiculous"you pay $250 for a nice room"you want to go to the gym"25 bucks"you want a water (in the room?) 12 dollars"(no joke)"you want dinner?? 2 people".75 bucks".and then they want you to gamble too"?? It was great for a while for them, but the CEO's must be smart enough to know that it was gonna end"they have to go back to cheap food and drinks"and the people will come gamble"why is that soooooo hard to understand".???????
cmedina8245 : That's because these idiot hotel/gaming executives are all graduates of the business school 101 type mentality which doesn't fathom the intricate approach to how the gambling business works. The very idea of non profitability of any area in a business just does not compute with these robots..
The Mega-Casinos have been going after the wrong people for the past 10 years. The Single 20's & 30's set have money for one trip as a fling, those are the people they been selling "What Happens Here, Stays Here". Those people only show up once a year at most, maybe once a lifetime. They should of catered to the people that had money, the 40's and above. These people would show up 4 times a year. Since their kids are all grown, they bring them too (in another room), these people have all the money to gamble (they aren't going to leave their money to their kids anyways).