By Steve Green, Las Vegas SunMcClatchy-Tribune Regional News
March 26, 2011--The recession and the over-supply of hotel rooms in Las Vegas continued to punish the Las Vegas Hilton and the nearby Riviera Las Vegas hotel-casinos during the fourth quarter, newly-filed financial reports show.
Bankrupt Riviera Holdings Corp., owner of the Rivieras in Las Vegas and Black Hawk, Colo., said in its annual report this week that the 2,075-room Riviera Las Vegas generated net revenue of $79 million in 2010, down from $92 million in 2009.
Companywide, Riviera Holdings posted a net loss of $20.8 million, down from $24.9 million in 2009. With the company in bankruptcy, its interest expense fell from $18 million to $8.3 million.
In Las Vegas, casino revenue for the year of $35.3 million fell 14.3 percent while room revenue of $33.4 million fell 5.9 percent. The average daily room rate fell 5.9 percent to $57.01. Occupancy, however, was nearly 81 percent, an improvement from 77.4 percent a year earlier.
In the fourth quarter, the company lost $5.2 million vs. $5.6 million lost in the year-earlier quarter. Net revenue of $27.8 million was down from $30.1 million.
Investors led by financier Barry Sternlicht, the founder of Starwood Hotels & Resorts Worldwide, are acquiring Riviera Holdings through the bankruptcy process.
The owner of the Hilton, in the meantime, said in its annual report the property lost $34 million in 2010 vs. a loss in 2009 of $28.9 million.
Net revenue of $188 million was down from $201 million.
In the fourth quarter, the property lost $7.365 million vs. a loss of $8.223 million in the year-earlier quarter. Net revenue of $46.7 million was down from $50.2 million.
The Hilton, with 2,650 rooms and 300 suites, said its hotel revenue remained steady from 2009 to 2010 at about $73 million in each year with steady occupancy and an average daily rate in both years of $86.
But its casino saw revenue decline from $80 million to $67 million.
"In 2010, table games revenue decreased approximately 19.6 percent and slot revenue decreased approximately 16.4 percent compared to revenues in 2009. The table games and slot volume decreased primarily due to lower spending by gaming visitors and fierce competition in the Las Vegas market," the company said in its filing.
"The economic downturn limited the number of visitors. Multi-location competitors offered gaming guests higher credit limits, longer payment terms, increased player incentives and enriched casino marketing programs. Similar programs were considered by the hotel but not implemented because they did not meet our profitability benchmarks. Race and sports book wagering during 2010 was similar to 2009 levels, but an unfavorable win percentage, especially on Super Bowl Sunday, produced a shortfall of win in 2010 compared to 2009," the filing said.
The Hilton's owner, Colony Resorts LVH Acquisitions LLC, includes investors affiliated with Colony Capital LLC and Goldman Sachs & Co.
The company this year reiterated a "going concern" warning from last year's annual report.
Besides the 2010 and 2009 annual losses, the company lost $437,000 in 2008. It now has assets valued at $355 million against debt and other liabilities of $292 million.
"The company's ability to meet debt requirements including interest payments, fund operations and make capital improvements depends on its ability to generate cash flow in the future and/or negotiate the terms of its debt. If adverse economic conditions persist, worsen or fail to improve significantly, the company could experience further decreases in revenues due to reduced consumer spending levels, which would cause the company to not generate sufficient cash to fund its liquidity needs or fail to satisfy the terms of its debt," the warning says. "The company cannot be assured that its business will generate sufficient cash flow from operations in an amount necessary to enable it to pay its indebtedness or to fund its other liquidity needs."
"The company is evaluating a range of financial and strategic alternatives in addressing trends in the company's operating results and financial position. These alternatives include refinancing, restructuring the company's financial obligations or the infusion of capital by ownership," the warning says.
"The conditions and events described above raise substantial doubt about the company's ability to continue as a going concern," it says.
However, Colony Capital and Goldman Sachs are considered to have deep pockets and the ability to refinance debt or extend maturities.
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