The Cosmopolitan of Las Vegas reported its third-quarter earnings to the Securities and Exchange Commission today.
Company: Nevada Property 1 LLC
Revenue: $179.8 million, down 4.8 percent from about $189 million in the third quarter of 2014. Each of the Cosmopolitan’s revenue areas declined from last year, except the casino side of the business.
Earnings: $4.7 million, compared to a net loss of $15.3 million in the third quarter last year. The Cosmopolitan reported a major decline in total operating expenses, which were $167 million in the third quarter this year compared to about $203.5 million last year. In particular, depreciation and amortization costs dropped from about $41.7 million in 2014 to about $28 million in the third quarter this year.
What it means: This is the second quarter in a row that the typically money-losing resort has reported a profit. Blackstone bought the Cosmopolitan for $1.73 billion last year.
The resort’s casino showed the most favorable year-over-year comparison. Revenue there was $55.8 million, up slightly from about $55.6 million in the third quarter a year ago. The Cosmopolitan’s SEC filing said that its revenue from table games dropped 8.7 percent, but slot machine revenue increased 21.9 percent because of boost in volume.
The Cosmopolitan remains focused on “supplementing the level of table games” played by domestic and international guests, as well as boosting the volume of slot play even more, according to the SEC filing.
Every other area reported a revenue decline.
Hotel revenue in the third quarter was $76.6 million, down 4.6 percent from $80.3 million last year. That was because of a decline in room occupancy, which was lower across all areas except for groups, the SEC filing said.
Food and beverage revenue was about $78.2 million, down 6.3 percent from about $83.5 million in 2014. The Cosmopolitan listed several factors for the decline, such as a $2.4 million drop in revenue from its Marquee nightclub due to increased competition. Other factors include less revenue from Rose. Rabbit. Lie. because of a concept change there, the closure of the Comme Ca restaurant and the closure of the Book and Stage bar.
Lower occupancy and fewer entertainment events didn’t help, either, according to the SEC filing.
“We may continue to experience a decline in food and beverage revenue in future periods as competition increases and we evaluate the mix of restaurants at our Property,” the filing said.
Revenue from entertainment, retail and other sources, meanwhile, dropped to about $8.2 million from $12.2 million in the third quarter one year earlier, a 32.9 percent decline. The resort said that was primarily a result of fewer entertainment events this year.
Today’s SEC filing also provided more details about the fallout of the fire at one of the Cosmopolitan’s pools this summer. The resort said it wrote off $300,000 of damaged or destroyed property and equipment.
The Cosmopolitan also filed an insurance claim for the replacement value of the destroyed items as well as additional expenses incurred and business interruption, the filing said. The insurance claim provided the resort with a $2.9 million advance for the value of what was destroyed in the fire, according to the filing.
“Additional proceeds from our insurance companies may be received in subsequent periods as we continue finalizing the submission of our claim,” the filing said. “We may incur additional costs that may not be reimbursed by our insurance companies.”