|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
July 13, 2012--The double whammy of competitive pressures and the loss of its Hilton franchise appears to be hitting the LVH -- Las Vegas Hotel & Casino -- harder than expected.
The 2,950-room Paradise Road property, formerly called the Las Vegas Hilton, lost $5.3 million during the four months ended May 31 -- more than four times the $1.2 million loss that had been budgeted for, records show.
The loss was calculated on an EBITDA basis, meaning additional expenses like depreciation were factored out. EBITDA means earnings before interest, taxes, depreciation and amortization.
The loss came as net revenue for that period totaled $50.1 million, $5.4 million less than what was projected.
With business slumping, an undisclosed number of LVH employees have been laid off in recent weeks -- though it's unclear how many of the job cuts are considered seasonal because of the usual summer slowdown.
After defaulting on its $252 million mortgage during the recession, the property was hit with foreclosure proceedings last year by lender and LVH investor Goldman Sachs. It also lost its Hilton franchise for undisclosed reasons.
Investor Colony Capital LLC in January relinquished control of the property to Ronald Paul Johnson, who was appointed as receiver pending the finalization of the foreclosure.
Johnson reports to Clark County District Court Judge Elizabeth Gonzalez, who's in charge of a lawsuit that put the property into receivership.
For reasons that haven't been disclosed, Goldman Sachs has yet to foreclose on the property.
Johnson, in the meantime, told Gonzalez in a June 25 update on his receivership that he has been working to increase room bookings.
But it appears he faces an uphill battle.
Overall occupancy in May was down 15 percent from May 2011, his report said.
"As in April, leisure travel occupancy suffered the greatest reduction, primarily continuing to reflect the loss of Hilton's worldwide reservation system and the elimination of room occupancy by Hilton Honors Program members," the report said.
Johnson's report added that "weak demand for rooms in the Las Vegas market contributed to decreases in occupancy" in all business segments except the tour and travel segment, which received a boost from third-party brokers.
The Las Vegas Convention and Visitors Authority reported Thursday that visitation to the city increased 2.4 percent in May and room occupancy was 86.6 percent.
In part because of the Las Vegas hotel building boom that concluded during the recession, that occupancy percentage was well off the 92.1 percent achieved during the boom period of May 2007.
In a statement Thursday, an LVH spokesman confirmed there had been recent staff cuts. But the company declined to elaborate on the magnitude of the layoffs.
"In light of the current economic conditions affecting Nevada, we, like so many other properties, were not immune to declining gaming revenue. When you combine that with the traditional softening of the Las Vegas market during the summer months, the LVH has had no other choice but to adjust its current staffing levels to be commensurate with current business levels," said LVH spokesman Kurt Ouchida.
"We are extremely proud of our talented workforce and we fully credit each and every LVH team member with making the LVH a premier gaming resort in Las Vegas," he said. "We are conducting a thorough review of staffing needs to ensure we continue offering guests an extraordinary experience here at LVH."
One of the workers who was laid off on June 16, casino porter and Culinary Union member Charlene Ellis, said the layoffs were clearly linked to the business slowdown and involved multiple departments.
"It's been getting slower and slower," the nine-year employee said.
Ellis said there has been talk that some workers may be recalled once the property is foreclosed on and a new owner is in place.
Otherwise, given the 11.8 percent unemployment rate in Las Vegas, laid-off workers may struggle to find new jobs.
"It's going to be pretty tough," Ellis said.
The property at last report in 2011 had some 1,900 full-time employees, 70 percent of whom were represented by labor contracts.
The Culinary Union, which still represents some 1,000 to 1,200 LVH workers, is monitoring the situation to ensure the union contract is adhered to and workers are aware of their recall rights, a spokeswoman said.
Johnson, in the meantime, is working to boost revenue and cut costs.
His report to the court indicated he's working with vendors to bring in some video table games that won't require the usual complement of human dealers.
They'll "allow patrons the opportunity to enjoy many of their favorite 'live' games in an electronic format at a lower wage level," Johnson's report said.
Johnson said in the report he's also working on development of a "value image by introducing value-priced restaurants, hotel packages and entertainment."
(c)2012 the Las Vegas Sun (Las Vegas, Nev.)
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