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Las Vegas Tropicana Cites Temporary Room Closures and
Economy for 2010 Earnings Slump

2010 Net Revenue of $54.2 million Down From $77.5 million in 2009

By Steve Green, Las Vegas SunMcClatchy-Tribune Regional News

Feb. 23, 2011--Net revenue tumbled 30 percent at the Las Vegas Tropicana hotel-casino in 2010 because renovations there required temporary closures of hotel rooms, restaurants and parts of the casino floor, the company reported today.

In its annual report, Tropicana Las Vegas Hotel and Casino Inc. said 2010 net revenue of $54.2 million was down from $77.5 million in 2009.

The operating loss for the property on the Las Vegas Strip, excluding a big asset writedown charge in 2009, grew by $17.2 million to $43.8 million in 2010.

The Tropicana said 2010 casino revenue of $25.6 million was down 25 percent while room revenue of $19.8 million fell 15 percent and food and beverage revenue tumbled 39 percent to $10.4 million because of cafe and buffet closures tied to the renovation.

Tropicana in today's report reiterated a common concern in Las Vegas: That the oversupply of hotel rooms in the city will keep depressing room rates.

"The unprecedented and challenging global economic conditions of the last few years have negatively impacted our results of operations by affecting visitor volume and overall consumer discretionary spending. Although there has been a slight increase in visitor volume to the Las Vegas market in recent months, consumer spending continues to remain low," the company said. "Corporate spending on conventions and business development remains at levels lower than experienced in the past in response to the current global economic conditions. These and other uncertainties have and could continue to adversely affect our results of operations.

"In addition, the Las Vegas market has seen an influx of hotel room inventory as a result of the opening of the Cosmopolitan Hotel in December 2010 with 2,000 of its approximate 3,000 hotel rooms available and CityCenter by MGM Resorts International in December 2009 with approximately 4,400 rooms. The increase in hotel room inventory has resulted in increased competition leading to a lower average daily room rate and hotel occupancy which translates into lower room revenue," the company said.

The Tropicana, controlled by Toronto investment house Onex Corp. and gaming executive Alex Yemenidjian, said in today's report that its $147 million renovation project should be completed this summer.

The renovation, launched in 2009, has already included updating of more than 1,300 rooms and suites, remodeling of the casino, reconfiguration of the pedestrian bridge from the MGM Grand hotel-casino, opening of Cafe Nikki and improved food and beverage outlets; and renovations of the convention center and pool area.

Jobs remaining to be completed include opening Club Nikki and Nikki Beach Club this spring, opening the casual dining South Beach Market Place venue, opening a poker room, designing new outdoor signage and the facade and renovating restrooms throughout the property.

Third parties, in the meantime, are developing an expanded race and sports book, a spa and the new "The Las Vegas Mob Experience" attraction.


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