Hooters reports loss, says Chapter 11 possible

By Steve Green

Friday, Nov. 13, 2009 | 2:36 p.m.

The owner of the 696-room Hooters hotel-casino in Las Vegas reported another quarterly loss Friday, even after slashing expenses.

155 East Tropicana LLC reported losing $5.377 million in the third quarter vs. a loss of $5.26 million in the year-ago quarter. Revenue of $10.729 million was down from $14.211 million as the recession deterred visitation to Las Vegas.

Operating expenses of $12.6 million were down from $16.15 million.

The Hooters property said it remains in default on debt obligations and that restructuring talks continue with the debt holders. The company has $147 million in debt.

"The company cannot be assured that it will be successful in completing a refinancing or restructuring. If the company is unable to do so, it may determine to seek protection under Chapter 11 of the U.S. Bankruptcy Code," 155 East Tropicana said.

The company was formed to buy the former Hotel San Remo and it reopened as Hooters in February 2006. Since then, the downturn in the economy has hurt results at Hooters and it's offering midweek rates as low as $20.

"The current state of the economy has negatively impacted our results of operations in the third quarter of 2009 and we expect that impact to continue in 2009 and into 2010," the company said in its quarterly financial report. "Because we are in the hospitality and recreation business, which is largely dependent on discretionary spending, we believe that the weak housing market, increases in unemployment, decreases in air flights to Las Vegas, decreases in the value of stock and other investments and the general tightening of spending on business travel have all affected visitations to Las Vegas and the spending budget of our customers."

A problem in the second quarter -- closure of 235 rooms to retrofit the plumbing risers -- was resolved by Aug. 14.

Tropicana Avenue road work in front of the property -- which reduced drive-in traffic as well as walk-in traffic from the MGM Grand across the street -- was completed in the third quarter.

"To counter these business disruptions and economic conditions, we have continued to focus on managing costs. Overall, operating expenses declined $3.5 million from the same quarter prior year. Operating costs are expected to continue to decline from 2008 levels in the fourth quarter of 2009 as we continue to target cost reductions," Hooters said.