The Cosmopolitan casino resort on the Las Vegas Strip lost $56.8 million during its first full quarter of operation as it continued to spend heavily on promotions and marketing to build brand awareness.
For the first quarter ended March 31, the resort expensed some $22.5 million for complementary rooms, food, drinks and other services.
"We expect this level of promotional allowance expense to continue in the short-term, but decline to industry norms as the initial ramp up period passes,’’ the Deutsche Bank-owned resort said in its quarterly financial report Friday.
Net revenue totaled $105 million for the resort, which opened Dec. 15 with 1,998 hotel rooms.
The first quarter results included $31 million in gross gaming revenue and the company said its focus on hosted table games customers "yielded solid results.’’
Room revenue of $34.4 million was achieved with a high average daily rate of $241, and occupancy of 85.7 percent. That compares to $201 and 86 percent at the nearby Aria resort at CityCenter.
Food and beverage revenue was $57.6 million, with the Cosmopolitan citing strong demand in its Marquee nightclub and high volumes at its restaurants.
The Cosmopolitan said it sold 15 condominium units for a gain of $7.5 million during the quarter. As of March 31 there were 199 condominium-hotel units under sales contracts, but given litigation over those deals and market conditions it’s unknown how many sales will close.
Some 286 hotel rooms were completed and added to the room inventory in late March and 682 more are under construction and due to open by August, the company said.
Despite the loss, Cosmopolitan CEO John Unwin said the property’s numbers exhibited "upward momentum.’’
“We are pleased with the key performance indicators: high room rates, strong hotel occupancy and our prominent position in the luxury tier,’’ Unwin said in a statement. "Guests continue to respond well to the Cosmopolitan which is reflected in our leisure and convention bookings, food and beverage revenues and positive trajectory in gaming.
"This upward momentum is a good sign for the resort and the Las Vegas market as a whole," Unwin said.