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Chris Sieroty

Despite strong bookings, Cosmopolitan sees quarterly loss

16 May 2011

The Cosmopolitan of Las Vegas' first quarter of operations is in the books, and despite its high occupancy rate, the newest resort on the Strip reported a $56.8 million loss, the company said Friday.

The Cosmopolitan, which cost Deutsche Bank AG $3.9 billion to complete, generated $104.9 million in first-quarter revenue. It's a revenue figure far less than its neighbors -- Bellagio or Aria -- reported in the first quarter.

Bellagio earned $251.4 million in net revenue, while Aria generated $225 million in revenue. Both Aria and Bellagio benefited from an well-established database of customers, which The Cosmopolitan continues to develop.

"We are pleased with the key performance indicators: high room rates, strong hotel occupancy and our prominent position in the luxury tier," Cosmopolitan Chief Executive Officer John Unwin said in a statement. "The upward momentum is a good sign for the resort and the Las Vegas market as a whole."

The Cosmopolitan, which opened on Dec. 15, said in an regulatory filing that its revenue produced from gaming was $31 million, while revenue produced at its bars and restaurants was $57.6 million and $34.4 million was generated in hotel room revenue.

Average daily rate and occupancy for the first quarter were $241 and 85.7 percent, respectively, generating revenues per available room of $206, the company said.

"Guests continue to respond well to The Cosmopolitan, which is related in our leisure and convention bookings, food and beverage revenues and positive trajectory in gaming," Unwin said.

The Cosmopolitan said its table games revenue "increased steadily" during the quarter, and it was focusing on increasing its slot machine play through building a database of customers and using its loyalty program.

The hotel added 286 rooms to its inventory during the quarter, which "did not have a significant dilutive effect" on average room revenues or occupancy.

The Cosmopolitan, with 2,284 rooms at the end of the first quarter, expects the remaining 682 rooms to be completed by August, and will be added to the hotel's inventory on demand.

As of March 31, the company had $81.7 million in available cash.

Nevada Property 1 LLC was formed in 2008 after Deutsche Bank purchased the 8.7-acre property out of foreclosure. Today, Nevada Property 1 owns and operates The Cosmopolitan.

Deutsche Bank reported in its 2010 annual report that in 2009 and last year it had written down the value of its investment on The Cosmopolitan by almost $756 million. The hotel-casino is now valued at about $3.3 billion.