Friday, July 18, 1997 | 11:11 a.m.
The completion of a renovation project resulted in record earnings for one Las Vegas resort while ongoing construction put a dent in the fortunes of another.
The Rio hotel-casino reported record second-quarter revenues and earnings on the heels of the completion of its Phase V expansion while Harrah's Entertainment Inc. reported lower earnings, attributing some of the downturn to construction disruptions at its Las Vegas Strip property and at Harrah's Lake Tahoe.
In Rio's first full quarter since the opening of its Masquerade Show in the Sky, the company reported revenues of $97.2 million resulting in net income of $6.6 million or 31 cents per share. That compares with second quarter 1996 revenues of $54.8 million -- a 77.4 percent increase -- and net income of $5.5 million or 25 cents per share.
Rio Chairman Anthony Marnell said in a release announcing quarterly earnings that the completion of the original master plan will allow the company to market the property as a nationally recognized premiere resort.
In the first quarter, the company opened its new 48-story tower bringing the room count to 2,563 suites, the 11th largest in the United States. It also added a 30,000-square-foot retail area, a new casino venue and a 730-seat showroom for impressionist Danny Gans. The company spent $11.2 million on preopening expenses in the first quarter.
Comparing the second quarters of 1997 and a year earlier, casino revenues climbed from $27.6 million to $51 million (up 84.8 percent), room revenues were up from $9.9 million to $17.7 million (78.8 percent) and food and beverage receipts were up from $4 million to $6.5 million (62.5 percent).
Officials at Memphis, Tenn.-based Harrah's Entertainment, meanwhile, are hopeful their results will be as dramatic in the period following their major renovations.
A strong performance at Harrah's Atlantic City property partially offset weak showings in Nevada and at the company's riverboat casinos, and the company wrote off unamortized deferred finance charges on high-interest debt during the quarter.
As a result of preopening costs, project reorganization expenses and extraordinary items totaling $98.5 million for the quarter, the company reported net income of $17.2 million (17 cents per share) on revenues of $408.9 million compared with second-quarter 1996 net income of $30 million (29 cents per share) on revenues of $401.1 million.
Operating profit increased by 13.5 percent on an eighth consecutive month of record revenues in June at Harrah's Atlantic City. And, profits climbed 35.8 percent at Harrah's Reno, attributed to events at the National Bowling Congress.
But extensive casino renovations resulted in a 30.1 percent quarterly decrease at Harrah's Lake Tahoe and the company's Southern Nevada profit declined by 44.8 percent.
Facade and sidewalk renovations at the Strip property are expected to be completed by Sept. 1 and a full room inventory of 2,700 should be on line by October, which means the third and fourth quarters may be affected.
Operating profit declined by 20 percent in Harrah's riverboat division, although the company's Shreveport, La., property maintained a high level recorded in the first quarter of 1997.
"The final phase of our $80 million expansion and enhancement in Atlantic City was completed during the second quarter and we are now beginning to see the total impact of the new hotel tower, additional casino space and Fantasea Reef buffet restaurant," said Chairman and President Phil Satre in a release announcing the company's earnings.
"In Nevada, we look forward to the completion of construction in Las Vegas," said Satre. "We are encouraged by May results where we saw business being driven by additional hotel capacity. The virtually complete transformation of Harrah's Las Vegas gives us a very high quality property on the Strip that is designed to attract Harrah's loyal players from around the country as well as new customers."
Another gaming company reported flat earnings in its third quarter.
Reno-based International Game Technology reported net income of $34.5 million (29 cents per share) compared with $34.7 million (27 cents per share) for the comparable period a year ago. Those results were based on a 16.7 percent decrease in revenues, from $196.6 million in 1996 to $163.8 million.
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