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Stratosphere owner narrows loss as revenue falls

Updated Friday, Nov. 13, 2009 | 11:03 a.m.

American Casino & Entertainment Properties, owner of the Stratosphere, reported a net loss today of $1.8 million during the third quarter of 2009, which improved from a net loss of $8 million in the same period of 2008.

The Las Vegas-based casino operator said net revenue fell 17 percent to $87.7 million in the third quarter of 2009 from $105.7 million in 2008.

American said in today’s Securities and Exchange Commission filing and during a third quarter conference call that its quarterly results were affected by overall declines in consumer spending and visitation to Las Vegas.

“The good news from the standpoint of Las Vegas is that nationally things seem to be improving from an economic perspective, which we hope will lead to increases in leisure travel and tourism,” American Casino & Entertainment Properties President Frank Riolo said, looking forward into the fourth quarter.

The company, which owns the Stratosphere, Arizona Charlie’s Boulder and Decatur and Aquarius Laughlin, said occupancy at the four properties plunged from 82.6 percent in the third quarter of 2008 to 69.5 percent in 2009. Average daily room rates fell to $44.75 in 2009 from $50.70 in 2008.

Occupancy at the Stratosphere fell to 93.2 percent during the third quarter of 2009 from 97.1 percent in the comparable period of 2008. Average daily room rates fell to $43.77 from $57.42.

Like other casino operators in Las Vegas, American said it is expecting an increase in competition with the addition of CityCenter.

“The increase in supply is certainly going to have an effect on the market,” Riolo said. “Jim Murren, who claims to have more information than anyone out there, says we are going to see an increase in visitation. We’ll have to wait and see.”

Arizona Charlie’s Decatur saw the biggest drop in occupancy as numbers plummeted from 90.2 percent in the third quarter of 2008 to 44.7 percent in the same period of 2009. While occupancy declined at the property by nearly half, room rates remained relatively flat at $47.

The company said it has no plans on changing strategies at its Arizona Charlie’s properties but is instead focusing on maintaining its existing customer base.

In a cost saving initiative, American said it trimmed full-time staff by 14.8 percent during the third quarter of 2009 to 3,647 compared to 4,282 during the same quarter last year. The company said it also implemented changes in scheduling and benefits and eliminated certain positions, reducing labor costs by 11 percent to $40.8 million during the third quarter of 2009 from $45.9 in the same period of 2008.

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