Map of The Riviera
The Riviera in Las Vegas posted a wider loss for the third quarter, mainly because of a noncash expense to write down the value of its assets.
The 2,075-room Strip property said today it lost, on paper, $19.6 million vs. the $4.9 million lost in the year-ago quarter. Net revenue fell from $19.7 million to $18.3 million.
Much of the 2012 quarter’s loss related to a one-time expense for an impairment to goodwill of $11.2 million.
Goodwill is an intangible asset representing the amount paid for an asset in excess of its fair market value. In buying assets, investors may pay more than fair market value because they believe in the potential for the assets to produce strong profits.
Even as visitation to Las Vegas has risen this year, the aging Riviera appeared to struggle during the quarter as it faced the long-running problem of a lack of foot traffic at the north end of the Strip and a market flooded with hotel rooms that opened between 2009 and 2011 at CityCenter and the Cosmopolitan.
The company said casino, room, food and beverage, and entertainment revenue fell across the board during the quarter, as hotel occupancy fell from 78.2 percent to 74 percent and the average daily rate fell $1.31.
The casino saw table game drop, or dollars wagered, increase $500,000 to $13 million. But the casino played unlucky, with its win percentage falling from 14.4 percent to 11.6 percent.
Overall, table game revenue of $1.5 million was down nearly 17 percent. Slot play increased from $96.6 million to $99 million wagered, but overall slot win fell $500,000. Combined, casino revenue fell 6.2 percent to $8.3 million.
“We believe that consumers have and will continue to save more and spend less on discretionary items such as vacations and gaming,” Riviera’s parent company commented in its financial report. “Based on these adverse circumstances, we believe that the company will continue to experience lower than historical hotel occupancy, room rates and casino volumes.”
These problems contributed to the company technically defaulting on some of its credit agreements earlier in the year, with analysts warning that the company has been generating negative EBITDA or earnings before interest, taxes, depreciation and amortization.
Riviera is carrying about $75.6 million in long-term debt.
Riviera said in today’s report it’s in talks with lenders about resolving the default.