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Chris Jones

Riviera Results Go Up, Up, Up

27 April 2005

The anticipation surrounding Thursday's scheduled opening of Wynn Las Vegas has cast a new luster around the bronze-covered buttocks that epitomize one of the Strip's oldest resorts, executives with Riviera Holdings Corp. said Tuesday.

And while no one would say how much longer the home of Las Vegas' famed "Crazy Girls" production show will maintain its current form, the Riviera's recent performance shows there are still enough patrons to support the 50-year-old gaming icon even as its newer, prettier challenger dresses up a block or so away.

"With the grand opening of our neighbor, Wynn Las Vegas, we expect a surge in the number of visitors at our end of the Strip," Bill Westerman, chairman of Las Vegas-based Riviera Holdings, said during a conference call about his company's first-quarter performance. "This offers a potential for increased walk-in traffic and growth in revenues."

In the three-month period ended March 31, Riviera Las Vegas turned that pre-Wynn potential into record quarterly cash flow for its parent company, as well as a nearly 300 percent increase in companywide net income.

Powered by strong convention business and increased room revenue in Southern Nevada, Riviera Holdings' quarterly cash flow, generally defined as earnings before interest, taxes, depreciation and amortization, was a record $11.6 million, up 8.5 percent from a year earlier.

Quarterly net income exceeded $2.1 million, up from the prior year's $540,000. Net revenue rose 4 percent to $52.5 million from $50.5 million.

Riviera Las Vegas President and Chief Operating Officer Bob Vannucci said his property enjoyed a 7.1 percent increase in room revenue fueled by a jump in both convention and leisure travelers. The Wynn development and new nongaming venues and luxury condominium towers now open or proposed near the Riviera's 26-acre site, should enable the property to continue its recent success through this year and beyond, he added.

Steve Ruggiero, an analyst with Stamford, Conn.-based CRT Capital Group, supports Vannucci's optimistic assessment.

"They're doing a decent job with that property given its physical limitations," Ruggiero said of Riviera Holdings management. "Having four hotel towers and a spread-out casino floor doesn't lend itself to the optimal cost structures, but I believe they've been very intelligent with how they've approached their convention business ... and how they've approached free and independent travelers.

"With Wynn going up down the street, it will provide Riviera with more room to price its product up," he added.

Still, Riviera leaders remain uncertain of their long-term plans for the Las Vegas property. Vannucci said recent deals in the neighborhood suggest the land beneath the hotel-casino is worth far more than its recorded $21 million book value. But Westerman added the company is in no rush to cash in its real estate holdings.

"We have no deadline for making any decisions," Westerman said. "We sort of wanted to wait until the pendulum swung to the north end of the Strip to make sure we could get a payoff on any of these investments. It looks like it's swinging pretty heavily right now."