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Chris Jones

Riviera Chairman Optimistic

10 June 2004

LAS VEGAS -- What's nearly 50 years old but has yet to ripen to its full potential?

The Riviera, or so say executives from the Strip hotel-casino's parent company.

Speaking Wednesday at an annual gathering of Riviera Holdings Corp. stockholders, Chairman Bill Westerman offered an upbeat appraisal of his company's sole Las Vegas property, a nearly 2,100-room aging icon that's failed to help its parent company turn an annual profit since 1997.

Westerman's should-be frown remains upside down largely because the Riviera sits on 26 acres of land in a north Strip area that's already a hotbed for redevelopment.

The city's next megaresort, Wynn Las Vegas, is ascending just a few blocks south of the Riviera. Other nearby projects, ranging from Turnberry Place condominiums and Fashion Show mall to the Hilton Grand Vacations time share and a planned luxury Conrad Hotel, continue to drive up nearby land values.

And that's without getting into the potential financial effects should the oft-rumored projects at the current New Frontier, Stardust or Wet 'n Wild sites become reality.

"Just use your imagination," Westerman said when asked to describe what developments might soon be in store for the Riviera site.

When pressed, the 72-year-old executive said it's too difficult to estimate how much longer his company will continue to operate its hotel-casino on the site. He's encouraged by Riviera Las Vegas' first-quarter earnings, which climbed 4.4 percent to $37.3 million. He also said cash flow and surrounding land values must be considered in any possible sale or redevelopment plans.

"At some point the price we could get for this land will be in excess of what we'd get by continuing to operate as a going concern," Westerman said. "But when we'll reach that point, I can't predict."

Riviera President Bob Vannucci's presentation showed the company is in tune with nearby land sales, however. He outlined several recent deals that drove up nearby land prices to more than $10 million per acre, further illustrating his company's valuable position on the north Strip.

Vannucci also said the company is working to bring a monorail station to the Riviera's south lobby, a potentially lucrative move he said remains at least three years away.

Westerman said Riviera has no plans to expand in other areas of Southern Nevada, adding, "I'm not looking to take on Boyd-Coast or Station Casinos in the locals market."

However, the company is optimistic it could soon secure regulatory approval to open a $172 million hotel-casino south of St. Louis in Jefferson County, Mo.

Ron Johnson, president of Riviera's Black Hawk Casino near Denver, said the Missouri Gaming Commission in early July plans to announce which of the six applicants will be awarded new licenses. He believes Riviera's proposed site, which is located farther south than those submitted by other applicants, will be approved because its underserved market will maximize gaming tax revenues for Missouri.

Westerman said Riviera's planned entry to the Show Me State helped show the door to his company's most well-known stockholder, Donald Trump.

"He's had an acrimonious relationship with Missouri regulators," Westerman said. "I think he sold his shares about three weeks after I told him we were going after a license" in Missouri.

Despite intense media coverage of Trump's recent purchases of 358,000 shares of Riviera stock, Westerman said the New York real estate mogul bought into Riviera solely to gain a Nevada gaming license.

"I don't believe he ever even visited our property," Westerman said of The Donald, who sold his 10 percent stake in Riviera Holdings on April 5.

Riviera shares closed Wednesday at $9.70, down 7 cents, or 0.74 percent, on volume of 3,600 shares.