First quarter results

The two weeks around New Year's Eve. were amazing for Aria, but the honeymoon didn't last long. The first quarter performance was abysmal, way below Bellagio. As a matter of fact the casino didn't have significantly higher revenue than Mirage at 20 years old. Occupancy was 63% (which I've never even heard of for a casino in Vegas).

The corporation seems to be in trouble and is on it's way to losing a lot of money. Wynn Resorts and Las Vegas Sands are making most or all of their profits in Asia.

Mandalay Bay and Luxor are nowhere near as profitable as they were two years ago. The corporation may have to shed some of it's properties again to pay down debt. Their former plan to sell their Detroit property was abandoned.

Quote: pacomartin

Occupancy was 63% (which I've never even heard of for a casino in Vegas).

At one point during this quarter, a member of another board had a really bad visit to Vdara. As part of the push to get answers from management about the dismal stay, we found out that they only had a small percentage (I want to say 20%; my memory fails me on this) opened and their occupancy rate, which was high, was based on the percentage of the rooms opened that were filled. The real percentage for the entire hotel capacity was around 20%.

Is there any chance this is true of the Aria also? I wonder if the 63% figure is even accurate based on the actual number of rooms in the hotel...

I was talking with Arnold Knightly from the Las Vegas Review Journal, and he said exactly the same thing. That 63% of the rooms just meant that was the percentage of the rooms that they had opened. The true numbers were probably much lower. He was speculating that it could be much lower. The overall revenue of $160 million for the quarter put them behind Mandalay Bay (which was really hurt by the loss of convention business).

The corporations are very careful how segmented the data is that they release so that you can't answer these questions. The preference is to only release broad data for a market. Harrah's will only give numbers for all their casinos in Las Vegas, or all their numbers in Atlantic City. The last time time that Gary Loveman spoke people asked him what was the most profitable hotel in Vegas. He replied that by percentage it was Imperial Palace or the original Harrahs. That's a fairly useless answer because you could almost guess that casinos with such low costs and expenses would be fairly profitable.

Why are some rooms not rentable? Did they not finish furnishing them or did they feel that with prospects so dismal they didn't even want to hire housekeeping staff for them?

I think they should have been biting down on the bullet: admit its tough times and give up their pretense of Upscale. I guess they just really want to hang on to a posh atmosphere that is empty rather than give the rooms away and be full. Maybe its the right strategy.

They probably are rentable. The ccasino holds back some rooms if there is no demand. The reason is that occupancy rate is a critical number to release to the media. It is possible that if all rooms were released the occupancy rate would be 47%. Executives know that will result in the innovative headline More than half of ARIA rooms sit empty. Nearly a death knell to advertising. Occupancy rate of 63% is not much better, but it won't show up in every newspaper around the world.

It is a oommon ploy. If a casino is doing badly, you say that a certain percentage of the tables were not "open", meaning no dealers were hired. That way when you release the average amount of money per day per table it is higher than it otherwise would be.