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Wednesday, Aug. 11, 2010 | 8:45 a.m.
Even as it invests $147 million in upgrading its property, the Las Vegas Tropicana hotel-casino posted a $10.8 million loss on declining revenue in the second quarter.
Tropicana Las Vegas on Tuesday said net revenue decreased 33 percent to $13.8 million for the three months ended June 30 vs. the second quarter of 2009.
The decline was "primarily related to decreased visitor volume due to disruption from our current property revitalization as well as reduced consumer discretionary spending," the Tropicana said in a regulatory filing.
"Our net revenues are expected to continue to be negatively affected throughout 2010 due to disruption from our capital improvement project, which has resulted in the closure of a significant number of rooms and a portion of the casino floor for renovation, which is expected to be completed in phases through the second quarter of 2011," the company said.
Excluding impairment charges and other write-downs in the 2009 quarter, the second quarter 2010 operating loss increased $7 million to $10.8 million, primarily because of the decrease in net revenue, the company said.
The $10.8 million loss also represented a deterioration from the first quarter loss of $7.7 million.
Room revenue fell $700,000 on a year-to-year basis as the average daily rate of $54 was off from $56, though occupancy improved from 78 percent to 80 percent.
"The current unprecedented and challenging global economic conditions have negatively impacted our results of operations by affecting visitor volume and overall consumer discretionary spending. Although there has been a slight increase in visitor volume to the Las Vegas market in recent months, consumer spending continues to remain low. Corporate spending on conventions and business development has also decreased substantially as companies are cutting costs in response to the current global economic conditions," the Tropicana said in Tuesday's report.
"In addition, in recent months the Las Vegas market has also seen an influx of room inventory as a result of the opening of City Center by MGM Resorts International in December 2009, which increased room inventory by approximately 4,400 rooms. The increase in room inventory has resulted in increased competition leading to a lower average daily room rate and hotel occupancy, which translates into lower room revenues,” the company said.
The 1,772-room property on the Las Vegas Strip is controlled by investors including Canadian investment company Onex Corp. and property manager Alex Yemenidjian. They purchased the company out of the Tropicana Entertainment bankruptcy last year for $205 million.
As for the $147 million capital improvements plan, the Tropicana said $65.3 million had been spent as of June 30.
The capital project includes renovating hotel rooms and suites, remodeling the casino, race and sports book; adding new slot machines; redevelopment of the convention center, pool area and showroom; food and beverage upgrades; a newly-designed facade and outdoor signage, the reconfiguration of the pedestrian bridge between Tropicana Las Vegas and MGM Grand Hotel & Casino and the addition of the Nikki Beach nightclub and Beach Club.
Tropicana Las Vegas sits on the south-east corner of Tropicana Avenue and Las Vegas Boulevard, an intersection which has the most adjacent hotel rooms in the world, also making it one of the most busy. The hotel has 1,658 rooms, three restaurants, a 62,011-square foot casino and a spa.
The Tropicana's five-acre pool complex stretches throughout the center of the the hotel/casino and remains it's most recognizable feature. It features swim-up blackjack during the summer months, a swim-up bar, dining areas and a wedding chapel. The Tropicana is also home to Brad Garrett's Comedy Club. For pre-show dining, take advantage of one the casino’s dinner and a show packages or just head over to Cafe Nikki, Biscayne Steak, Sea & Wine or Bacio Pasta & Vino.
Obama lied. He lied about the healthcare debate being on C-Span, he lied about closing Gitmo, he lied about getting out of Iraq and now he's lying about the economic recovery.
Looks like the TROP
is going to move to Miami for the
real ocean beach night club night life.
I hope when they remodeled the rooms
they left the mirrors on the ceilings.
The decline was "primarily related to decreased visitors" "as well as reduced consumer discretionary spending" the Tropicana said in a regulatory filing.
Pretty much sums up the economy in general for all resorts in Las Vegas.
No wonder they put this guy Chuck Esposito as casino manager with absolutely no tables or slot game experience.
Cash loss? I doubt it. Most of these companies are posting losses due to depreciation, which are paper losses. They don't have any capital expenditures related to the renovation? If you don't know balance sheets and accounting, it's a very doom and gloom situation.
I was at the Tropicana about 2 weeks ago and it's obvious it's under construction but what I've seen that is finished looks real good. Brought a tear to my ey. I remember it from two years ago and it was pertty bad to say the least. Think of all the investment into Las Vegas hotel rennovations and new openings. Guess the big money sees a future in Vegas. I hope they are right, I love this town. Nowhere in the USA can u find Vegas. We may have to ruff it awhile, but the ones who stay strong will do very well. Although November will be very telling.
Word of mouth goes along way. If everyone tells your that the Tropicana is dump they will not stay there. It looks like they are shaping up though the rooms look nice enough to give it a try. I don't what that first comment about Obama was about, sounds like another wingnut.
So, one article before the renovation started said it was costing $100 million. An article the other day somewhere (Sun maybe??) said $165 million. This article says $147 million.
How much is the renovation costing?????
Looks like another spot on The Great Ruins of Las Vegas Tour.
Tom Shermspun
@Tom S
I think you are wrong. They only paid 205 million for the Trop and after this rennovation I think they will do well. Good location, decent prices for the strip, great pool. I very well see them doing ok over time. Remember, Vegas will be the last to recover. Vegas is an adult playground, a treat to people who work hard 51 weeks of the year. We provide a getaway from everyday life. When Bugsy startedthe Flamingo you could have started your great ruin tour. There's always the neggative people. Go play the don't pass line.
This hotel will be owned by MGM or Harrah's by next year.
Great renovation,Now they need to get the people in the door to gamble.Time to have a open renovation house party.Show the people what you have done.
We would like better comps and better odds on all games.Just turn that switch to better odds.
Listen to the people not Wall Street.
MGM and Harrah's are only surviving by way of creative refinancing these days, the Trop is far better off.
No Way is the Trop going to make it . This $165m renovation is a drop in the ocean. They should have IMPLODED it and come up with a smaller Miami theme Casino . There is too much competition from MGM < Mandalay Bay , City Center ETC for Trop to succeed .
What must it be like to be this ThomasShermspun dude and have your entire existance seemingly depend on businesses, in fact our whole community's failures... and not just the ones that actually happen, but he seems to pray for the end of Las Vegas. Nice life dude...you're certainly entitled to live it.
I prefer those with dreams, hopes and energy and the drive to risk it. Hang in there Tropicana, the word is gettin' out that you're back open for business and I wish you the best!
@smartone
LMAO. Tom S won't be happy until it's world war 3!
Don't belittle the Tropicana. Yes it is old. Yes it has seen better days. Yes it was built in 1957. Yes it is somewhat old fashioned. But give it a chance. This 'oldie' is trying to get back on its feet whereas other casinos have simply thrown in the towel and let their place fall to pieces.
I strongly admire the Tropicana because it is one of the 'old Las Vegas' casinos. A lot of others such as Stardust, Sands, Dunes are gone and hope that the Tropicana can pull through in those tough times. Give it a chance and I look forward to seeing the Tropicana especially those long high steps in the back of the casino leading to the casino area.
They should totally implode it, build an $8 Billion office complex masquerading as a resort, price themselves right out of the market, struggle to unload "condos" which are really just hotel rooms at half price, make the casino as inaccessible as humanly possible, and lose a billion dollars a quarter instead. Yup, MGM sounds like they'll be buying Tropicana tomorrow.
It might just work out. The location is great and they are very close to the airport. Pool area is nice. Rehab the place, clean it up, and it might draw in people.
Now, if they have lousy 6-5 blackjack, high table minimums, tight machines -- the usual Strip story, then they will have no chance against the big dogs.
These independent operators like the Trop need to go against Harrah's and MGM, not copy them. Give customers fair games, don't kill them on food and drink prices, and avoid the cattle call attitude -- this might work out.
Of course time will tell. Short of implosion the only way to go is up for this outfit.
Check out my always informative LV blog:
http://jimmyhoofa-lv.blogspot.com/
I'm still amazed at the blatant hostility of many comments. The Tropicana has it challenges and the 160M is simply not enough. Their exceptional location must be leveraged more effectively. The new look of the logo strikes me as a tad generic and bland without the cash behind it to really do it right. I hope their casino isn't sweating the money. Is their CM really inexperienced? I would find it hard to believe Alex would allow that. But remember, Loveman never managed a property or wrote a comp and he propelled Hurrah's (not that I like what he has done with the brands :)
Hey, Jimmyhoofa...
I totally agree with your opinion/outlook on the Trop. The high-echelon, mega-upscale resorts are now established and functioning. The 'older' gaming venues (Trop, Flamingo, Riviera, Sahara, etc.) need to take up the slack in the much-less-than-super-upscale hotel/casino offering.
The independent operators definitely have a niche; the common, everyday, middle and semi-middle-income Jill and Joe. If the services and gaming offered by the independents reflects the not-too-distant-past Las Vegas, the Trop and it's "kindred kind" will be quite successful.
I have not visited the Tropicana since 2004 (and I'm in Vegas at least twice a year), but I will DEFINITELY check it out on my next visit in November. I wish the Tropicana and all of the older hotels the very best in redefining themselves.
DON'T ERADICATE! RENOVATE!
thanks for sharing nice article
I hope the Tropicana does not sell out to MGM or Harrah's ... the casinos were much better when they are indepenmdetly owned and ran such as the Imperial Palace use to be. I will definitely stay at the Tropicana in the future!!!
Oh and it makes me upset how they big wigs imploded the Stardust and Westward Ho and those lots are still empty!
I hope they bounce back.
I really appreciate the renovations/investment, but I hope the Trop remains the Tropicana, just the way it used to be, for old times sake.
http://www.magicofmagicians.com/siegfrie...
http://www.youtube.com/watch?v=WtzBQK6ij...
http://www.youtube.com/watch?v=uvxI7EMTk...
I still remember how an ole buddy named The Banana_Joe used to talk about just checking in at "The Trop", just once in his life, but that he had not made it yet, he even missed Wayne Newton at his "Once Before I Go", because he was working late. We need that old (s)cool Tropicana experience here.
Folks, it is time to reveal why the Trop is doing so poorly. They were still placing people in the older rooms until a short while ago. Construction was evident everywhere in the main casino and the pool was closed. Ther was also a stabbing death in the parking lot. It takes quite a while to convince people that these things are now all finished/fixed. Anyone go in there recently?
I continue to receive free ads, etc. for the Trop but unless I see a sign that says Construction is finished and security is improved, I will not even bother looking.
Lastly, they shot themselves in the foot when they went to the same slot point system that everyone else on the strip uses. This took them out of the game of "best slot point value". It used to be that you could spend a few hundred bucks and then go get some of your cash back. You no longer get that; instead you might get slot credits. Without being the best slot program, they are simply average. And please tell me who goes from Tropics to South Beach? It is essentialy the same thing. Unless I am missing something such as Cuban cigars what is the difference?
One more thing, if I was in charge, I would implode that awful excuse for a buffet. If you are in a spending mood, why not build a first class buffet so people stop going to the MGM to eat. Anyone ever think of that? I have tried a few of the new restaurants. I am quite underwhelmed.