pacomartin
pacomartin
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May 18th, 2010 at 3:29:07 AM permalink
May. 17, 2010
Copyright Las Vegas Review-Journal

NORTH END GOES SOUTH: Riviera posts first-quarter loss

Article Removed
ruascott
ruascott
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May 18th, 2010 at 6:33:09 AM permalink
Have to start wondering how long these properties will survive. Their savior was the Echelon and F'Blue, and even the Plaza. But none of the properties will come online for years, if ever.
pacomartin
pacomartin
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May 18th, 2010 at 7:54:13 AM permalink
Most of the properties on the strip are still going down in the first quarter of 2010. The Wynn/Encore and Venetian/Palazzo are getting better. Golden Nugget went up. But certain properties are going further and further into operational losses. Hilton, Stratosphere, Riviera, Hooters, and Hard Rock Casino are the worst.

I think this poaching of North Strip customers by Harrah's will prevent them from ever turning a profit again. Once your casino guests have been turned into casino guests you can't make any money.
gambler
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May 18th, 2010 at 8:53:11 AM permalink
I have to agree with you Pacomartin. While the room rates at the Circus Circus, Stratosphere, and Riveria might be cheaper then the main strip, I can see people just sleeping there and going South to gamble, eat and play.

I would have to think that the Hilton will start to do better as conventions come back to Las Vegas.
pacomartin
pacomartin
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May 18th, 2010 at 9:17:29 AM permalink
One would think that if you ordered them from most vulnerable to least vulnerable they would be:
1) Circus Circus
2) Riviera
3) Sahara
4) Stratosphere
5) Palace Station
6) Hilton

Circus Circus started running at an operational lost about 8 months ago. With more tourist business people are more likely to wait to eat breakfast until the bus goes 10 minutes to Ceasars.

As I said in the article they have very little ability to fight it. Discounted rooms makes it even more likely people will "motel" there. Convenient bus access doesn't help. Discounting the buffet even lower (it's at $25 now) doesn't help much because people see the $35 City - Wide Harrah's buffet as a cheap way to be able to walk around the strip and still not be far from a meal. If Circus Circus drops the buffet to $15 a person then it is even less likely that they will earn their nut so to speak. The casino needs to make $171 per room at current occupancy rates. If you rent the room for $44 on average, and people buy two buffets, you are only a little halfway there. If people buy t-shirts or gamble a little or buy adventure dome tickets ($25 apiece) you get closer. But the buffet price is critical.

Of course if Circus Circus and Riviera both close down, it may be a short term boost to the other casinos, but they will be even more isolated.

But Hilton you would think would have a core business of convention goers that don't want to pay Marriot or Renaissance prices. Plus the name Hilton doesn't look funny on an expense account like Harrah's or Flamingo.

I did once put one night at a Club Med on an expense account. My boss told me I was crazy.
Wizard
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Wizard
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May 18th, 2010 at 9:49:33 AM permalink
Frank, I agree with your comments in the article. As evidence, I looked up rates for this weekend (May 21-23). Here are some per night averages:

North Strip:
Sahara $69
Circus Circus $80
Stratosphere $112
Riviera $144

Center/South Strip:
Luxor $125
Harrah's $125
Imperial Palace $130
Tropicana $117
Bally's $144
Planet Hollywood $169

In general, I think it is worth it to pay the extra cost for the better location and amenities of the central/south Strip properties. For those on a tight budget, the Circus Circus and Sahara seem reasonably priced. However, the Riviera is patently ridiculous at $144. The Stratosphere at $112 is also overpriced. If someone came to me wanting a recommendation in the $100-$150 range, I'd suggest the Luxor or Planet Hollywood.

Quote: pacomartin

One would think that if you ordered them from most vulnerable to least vulnerable they would be:
1) Circus Circus
2) Riviera
3) Sahara
4) Stratosphere
5) Palace Station
6) Hilton



I would put Circus Circus between the Sahara and Stratosphere, otherwise I agree. I'll bet you a dinner that the Riviera closes its doors before Circus Circus.
It's not whether you win or lose; it's whether or not you had a good bet.
DJTeddyBear
DJTeddyBear
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May 18th, 2010 at 10:14:23 AM permalink
Quote: Wizard

I'll bet you a dinner that the Riviera closes its doors before Circus Circus.

Can I get in on that action?

But I'd like to expand the wager to say "closed or sold".

As ridiculous as the hotel rates are, Riviera gets convention business, so I think it's got a shot at lasting longer than Circus Circus.
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Croupier
Croupier
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May 18th, 2010 at 10:28:13 AM permalink
If were going for modified wagers, Ill take the Sahara to go (closed or sold) first. From my limited knowledge, short of the NASCAR crowd it doesnt seem to have a hell of a lot going for it anymore.
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pacomartin
pacomartin
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May 18th, 2010 at 10:49:30 AM permalink
Quote: Wizard

I would put Circus Circus between the Sahara and Stratosphere, otherwise I agree. I'll bet you a dinner that the Riviera closes its doors before Circus Circus.



I put Circus circus as the most vulnerable to poaching because it is already running at an operational loss about double that of Riviera (by percent). Riviera has has 1 out of 6 customers as corporate customers who are not free to wander around. But dollar wise the loss at Circus Circus is just noise compared to what MGM is losing at Aria. The corporation may absorb this loss just to avoid the publicity.

The Riviera Corporation has nothing to fall back on and is already in bankruptcy negotiations.

Same thing with Sahara and Stratosphere. They are backed by so much money that they may not close simply because they can afford to stay open. If you sell the properties you have to realize the capital loss, and simply closing down means you still have fixed costs which could be worse than the current operational losses.
Wizard
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Wizard
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May 18th, 2010 at 10:50:11 AM permalink
Quote: DJTeddyBear

Can I get in on that action?

But I'd like to expand the wager to say "closed or sold".

As ridiculous as the hotel rates are, Riviera gets convention business, so I think it's got a shot at lasting longer than Circus Circus.



I'd be happy to offer the same wager to you, but I decline the "or sold" counter-offer. Just because a property is sold doesn't necessarily mean it was financially troubled.

That is a good point about the Riviera conventions. I've been to casino chip collector shows there. However, it wouldn't surprise me if better located properties start undercutting Riviera convention space fees, even at a loss, to poach that business.
It's not whether you win or lose; it's whether or not you had a good bet.

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