Cosmopolitan finances improve despite decline in casino revenue

The Cosmopolitan of Las Vegas.

Map of Cosmopolitan of Las Vegas

Cosmopolitan of Las Vegas

3708 S. Las Vegas Blvd. , Las Vegas

The Cosmopolitan of Las Vegas reported growth in sales and a smaller loss for the third quarter, despite lower casino revenue.

The 2,966-room Las Vegas Strip resort opened during the down economy in December 2010 but has been steadily building revenue on a year-over-year basis. Today, it reported net revenue for the quarter ending Sept. 30 of $145.3 million vs. $126.6 million in the year-ago quarter.

The $3.9 billion resort’s quarterly net loss was $34.4 million, down from $58.5 million a year earlier.

In the most recent quarter, the property operated at a near-break-even pace on a cash basis. Its operating loss of $42 million included $41.5 million in noncash depreciation and amortization expenses.

Casino revenue at the Cosmo has always been a smaller piece of the revenue pie than room, food and beverage revenue, and efforts to boost casino revenue during the third quarter sustained a setback when the casino played unlucky at its table games.

The Cosmopolitan said those games won just 7.2 percent of the dollars wagered, down from 9.1 percent in the prior-year quarter and well off the expected range of 12 percent to 15 percent.

Overall, casino revenue fell $1.3 million, or 5.5 percent, to $22.6 million.

The Cosmopolitan said in today’s financial report it’s continuing to focus on increasing the volume of slot play through its Identity guest loyalty program and building its database of slot customers.

Room revenue increased $10.6 million, or 21.5 percent, to $59.9 million, with the company citing strong demand for its rooms as well as the addition of 458 newly completed rooms in September 2011.

With an average daily rate of $257 and occupancy of 85.7 percent, revenue per available room during the quarter was $220, up from $195 a year earlier.

With more hotel rooms in service bringing more people to the property and the Cosmopolitan boasting some of the Strip’s busiest restaurants and entertainment venues, food and beverage revenue jumped 19.6 percent — from $68.9 million to $82.4 million.

Overall, the company said another factor affecting its financial performance is a continued elevated level of complimentary rooms, meals and other free goods and services provided to certain guests to build loyalty. These comps were valued at $28.4 million during the third quarter, up from $22.2 million in the year-ago quarter.

“We believe the level of promotional allowances incurred was necessary to continue to drive customer awareness, build our customer database and create customer loyalty. We expect this level of promotional allowance expense to continue in the short-term, but decline to industry norms over the long-term,” the Cosmopolitan said in today’s report.