Stratosphere owner reports loss in fourth quarter

By Steve Green

Published Monday, March 21, 2011 | 7:42 a.m.

Updated Monday, March 21, 2011 | 9:02 a.m.

American Casino & Entertainment Properties LLC today reported a fourth quarter loss as revenue declined at its Las Vegas properties.

American Casino said it lost $17.4 million in the quarter, about even with a loss of $17.6 million in the same quarter of 2009. Net revenue of $79 million was down 1.9 percent.

With Las Vegas facing an oversupply of hotel rooms, American Casino's Stratosphere hotel-casino saw net revenue decline 4.2 percent to $34.6 million on lower room rates and lower spending by guests.

Occupancy of 89.4 percent was up from 86.8 percent in 2009, but the company noted some of its rooms were out of service for remodeling in the 2010 quarter.

The average daily rate at the 2,427-room property of $44.12 was down from $46.22.

CEO Frank Riolo said on a conference call with analysts that the Stratosphere in the long run probably won't be affected one way or the other by the planned closure of the nearby Sahara hotel-casino on the Las Vegas Strip.

But in the short term, the closure will result in another empty building between the Stratosphere and the south end of the Strip and "we don't look on it as a positive," he said.

Also, executives said they're talking with Sahara executives about picking up both some of the Sahara's business and employees. Previously, the Sahara said it was working with MGM Resorts International, but American Casino executives said not everything on those issues is settled.

At the two Arizona Charlie's properties, with a combined 561 rooms, net revenue fell 3.2 percent.

"The Las Vegas local market continues to be impacted by a difficult economy, high unemployment and heavy promotional activity by our competitors," American Casino said in today's report.

A bright spot was the 1,907-room Aquarius in Laughlin, which posted a 4.1 percent increase in net revenue thanks to targeted marketing programs.

The company said EBITDA, a profitability measure, rose from $4.2 million to $7.6 million. EBITDA means earnings before interest, taxes, depreciation and amortization.

But higher expenses, on paper, for depreciation and amortization caused the net loss to be about equal with the 2009 period. Depreciation and amortization expenses of $13.6 million were up from $10.5 million.

Finally, American Casino executives said that while customers remain frugal during the recession, they haven't seen business affected by rising gas prices.

Any affect may be more noticeable in the summer driving months, they said.