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Arnold M. Knightly

Hooters Hotel posts lower revenue

16 August 2007

LAS VEGAS, Nevada -- New advertising and reduced room rates helped Hooters Hotel increase second-quarter occupancy. However, key revenue categories continued to run flat or decline at the property a quarter mile off the Strip, officials said Wednesday.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, nearly doubled to $1.3 million for the quarter ended June 30, from $670,827 in 2006.

Cash flow for the year is approximately $3.4 million.

Barbara Cappaert, an analyst with KDP Investment Advisors, adjusted expectations downward, dropping cash flow estimates for 2007 by $2 million to $8.5 million.

Net revenue fell 4.2 percent to $17.3 million from $18 million.

Quarterly casino revenue fell to $6.2 million from $6.5 million. Six-month casino revenue fell to $12.3 million from $13.2 million.

The gaming revenue decline was reflected in a softer April than 2006, Chief Financial Officer Deborah Pierce said during an earnings conference call. A year ago, Hooters, formerly the San Remo, was still riding a promotional high tied to the Feb. 3, 2006, reopening, she said.

In the second quarter Hooters Hotel launched a new advertising campaign targeting the Southern California market. The campaign includes direct mailings, billboards, television and radio spots.

Hotel revenue, which includes retail and spa, continued to run flat for the quarter at $6.4 million year-to-year. A cut in room rates increased room occupancy to 95.7 percent from 73.9 percent in 2006. The hotel slashed the average daily room rate 18 percent to $78 from $96 charged last year to lure more players.

Despite the occupancy increase, room revenue rose only 6.7 percent to $4.8 million for the quarter, from $4.5 million a year earlier.