|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
March 24, 2012--The Cosmopolitan of Las Vegas on Friday posted its first profit, saying it earned $72.6 million during the fourth quarter thanks to a special tax benefit.
Without the tax benefit, the property would have posted an operating loss of $54.7 million -- a number higher than the 2011 quarterly operating losses that had been running in the $45 million to $50 million range.
The 2,963-room, $3.9 billion resort on the Strip opened on Dec. 15, 2010, and since then has struggled to make money because its casino has underperformed in relation to its hotel and its food and beverage outlets.
For all of 2011, the Cosmopolitan lost $97 million on net revenue of $478.6 million, the company said in its annual report Friday.
The 2011 loss was reduced by a $138.5 million special income tax benefit that was recognized in the fourth quarter. The benefit related to a complicated change in the tax status of the resort's parent company.
It was this same one-time income tax benefit that caused the company to report -- on paper -- its $72.6 million fourth-quarter profit on quarterly net revenue of $120.1 million.
While the Cosmopolitan worked to improve its casino revenue in 2011, its hotel achieved a strong average daily rate of $237, and the hotel was occupied 84.3 percent of the time.
Also, the Marquee nightclub and dayclub at the resort was named the highest-grossing bar in the nation last year, the Cosmopolitan pointed out in its annual report. The club is believed to have grossed $70 million.
Unlike some properties where the casino is the biggest revenue generator, the Cosmopolitan's largest revenue producer in 2011 was its food and beverage operation ($258.5 million), followed by the hotel ($178.4 million) and the casino ($107.4 million).
The Cosmopolitan said in its report that it opened a high-limit gaming area with 15 tables in November and that it's also trying to boost casino results by increasing slot play through the property's Identity loyalty program.
Another factor that affected the 2011 results was a high amount of comps provided to customers: $90.3 million. The Cosmopolitan said these comps were necessary to build market share in the early stages of its development and that at some unspecified point, its level of comps will decline to industry norms.
(c)2012 the Las Vegas Sun (Las Vegas, Nev.)
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