Stratosphere owner loses $2.7 million in first quarter

By Steve Green

Wednesday, May 12, 2010 | 12:46 p.m.

The Las Vegas tourist shortage/room oversupply situation was cited today in another first quarter earnings report, this time by Stratosphere owner American Casino & Entertainment Properties LLC.

American Casino said it lost $2.7 million in the quarter vs. $1.6 million lost in the first quarter of 2009. Net revenue of $87.8 million fell 6.3 percent.

Besides the Stratosphere hotel-casino on Las Vegas Boulevard, American Casino owns two Arizona Charlie’s properties in Las Vegas and the Aquarius in Laughlin.

The company attributed part of the revenue decline to "sharp decreases in rates across our markets" and "an increase in Las Vegas citywide room inventories."

"Generally weak economic conditions, increased personal and business bankruptcies, increased unemployment, difficult consumer credit markets, reductions in airline capacity and passenger volumes to Las Vegas’ McCarran International Airport and declining consumer confidence have all precipitated an economic slowdown, which has negatively impacted our operations," the company said in its quarterly report. "In addition, the high level of unemployment and declining real estate values in Clark County have had a significant negative impact on our properties which cater to local customers. In addition, the Las Vegas Strip has experienced a 5.8 percent increase in supply of hotel rooms that has negatively impacted room rates and occupancy throughout Las Vegas, despite the Las Vegas Convention and Visitors Authority reports of year-over-year increases in visitation."

The Stratosphere, which accounts for about 50 percent of the company’s 4,895 hotel rooms, achieved occupancy of 84.3 percent for the first quarter, down from 90.2 percent one year ago.

For the entire company, hotel revenue decreased 7.3 percent to $13.9 million.

The company also cited higher debt expenses, expenses to appeal its property tax assessment and pre-opening expenses for the new SkyJump at the Stratosphere. That attraction opened during the second quarter, so it produced no revenue in the first quarter.

Despite the economic challenges, American Casino said it would spend about $20 million this year to renovate hotel rooms, corridors and the casino floor at the Stratosphere.