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Best of Chris Sieroty

Gaming Guru

Chris Sieroty
 

Cosmopolitan of Las Vegas reports $25.2 million quarterly loss

5 August 2013

LAS VEGAS -- The Cosmopolitan of Las Vegas reported a quarterly loss Friday, as modest revenue gains across the board were not enough to offset a 20 percent decline in casino revenues.

The $3.9 billion Strip resort said it lost $25.2 million in the second quarter, compared with a loss of $18.7 million in the year-ago quarter. Net revenue of $171.2 million was up from $165.7 million.

“We are encouraged by the increases we continue to experience in key areas of our business and pleased that the brand continues to resonate with Las Vegas visitors and locals, further establishing our position within the luxury market,” the resort said in a statement.

Casino revenue at the Cosmopolitan continued to trail food, beverage and room revenue. For the second quarter, the resort generated $30.6 million in casino revenue, compared with $38.6 in the same period last year.

Casino revenues decreased $8 million, or 20.7 percent, because of lackluster results from table games, the Cosmopolitan’s parent company, Nevada Property 1 LLC, said in an earnings report.

The table games hold percentage was 9.1 percent, below the 10 percent to 14 percent range forecast by the resort. The Cosmopolitan operates a 110,000-square-foot casino with 1,376 slot machines and 101 table games.

In its earnings report Friday, the Cosmopolitan said it continues to focus on table and slot play, a strategy the luxury hotel has been working on since its grand opening in December 2010.

The Cosmopolitan in the second quarter saw hotel revenue increase $7.7 million, or 12.1 percent to $71.1 million, as the average daily room rate increased from $268 to $283.

The quarterly occupancy percentage was 93.6 percent, up from 87.3 percent.

The resort’s food and beverage revenue increased $7.1 million, or 8.6 percent, to $90 million in the second quarter. The company also cited strong business at its Marquee nightclub and restaurants.

Entertainment, retail and other revenues jumped $1.6 million, or 21.1 percent to $9.3 million, because of higher revenue generated from entertainment events as well as from its retail and spa services.

The resort sits on 8.7 acres on the Strip between Bellagio and CityCenter. Nevada Property 1 is a wholly owned subsidiary of Deutsche Bank, which purchased the property at a foreclosure sale on Aug. 29, 2008, for $1 billion.

The Cosmopolitan did not update shareholders or the Securities and Exchange Commission in its report on any contract negotiations with the Culinary Union. The union held its fourth protest Wednesday, blocking the Strip in front of the resort.

Negotiations have been stalled between the Culinary, which represents about 55,000 bartenders, maids and food servers, and the Cosmopolitan. Both parties have been unable to agree on job security, health care and wages.