Cosmopolitian reports $54 million loss

16 August 2011

LAS VEGAS, Nevada -- The Cosmopolitan of Las Vegas posted a $54.3 million second-quarter loss Monday as the resort continues to change its casino operations to increase gaming revenues.

The Strip hotel-casino generated $28.2 million in casino revenue in the second quarter ended June 30. The property opened Dec. 15.

In the first quarter, The Cosmopolitan generated $31 million in casino revenue. For the second quarter, the hold percentage was 11.6 percent, which was below the company's expected range of 12 percent to 15 percent.

"The volume of table games play increased steadily over the three months as our focus on hosted table games customers continues to yield solid results," the company said. "We continue to focus on supplementing the level of table games play at the property."

The property's owner, Nevada Property 1 LLC, said its latest results included a $2 million charge to write off the value of a lounge, which will be demolished to make room for an additional high-limit gaming area.

The 9,600-square-foot area will include 15 table games and is expected to be completed by November. The high-limit area will not include poker, but will offer blackjack and baccarat among other table games.

"Given the growing demand from our guests for high-limit gaming facilities, now is the ideal time for (us) to debut our high-end gaming experience," Cosmopolitan public relations director Amy Rossetti said. "The venue will reflect the sophisticated design and attention to detail that our customers have come to expect ... combined with a level of service and gaming that will meet and exceed the standards of the high-limit gambler."

Overall, Nevada Property 1, which is owned by Deutsche Bank AG, reported a loss of $54.3 million on net revenue of $126.1 million in the second quarter. For the first six months of the year, The Cosmopolitan lost $111.1 million on net revenues of $231.08 million.

The $3.9 billion resort between CityCenter and Bellagio lost $56.8 million in the first quarter on net revenues of $104.9 million.

Hotel revenue in the second quarter was $45.9 million, up from $34.4 million in the first quarter as additional rooms were brought on line. As of June 30, The Cosmopolitan has 2,518 available rooms, with another 448 to be added by the end of September.

"We have established ourselves as a significant player in the luxury tier of the market as demonstrated through our ongoing strong average daily room rate and occupancy," Rossetti said.

Average daily room rate and occupancy for the second quarter were $246 and 91.4 percent, respectively, generating revenues per available room of $225, the company said.

Food and beverage revenue continued to represent the largest piece of the earnings pie. The Cosmopolitan earned $170.1 million in the second quarter compared with $57.6 million in the first quarter.

As of June 30, Nevada Property 1 had $77.9 million in available cash.

In its quarterly report, Nevada Property 1 said it plans to finance the completion of the 448 rooms through its current credit lime with Deutsche Bank, but the company may "require additional financing to support future growth."

Related Links
Deutsche Bank Securities Inc. Gaming Vendor Information
The Cosmopolitan of Las Vegas Details
Nevada Gambling


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