Even though Monarch Casino & Resort
Inc. had an eye-popping quarter, don't look
for the company to expand its Atlantis
Casino Resort any time soon.
Instead, the company wants to benefit
from very high occupancy rates a while
longer, and it wants to pay down more of its
debt.
As Monarch reported earnings of $3.5
million, or 36 cents a share, for the third
quarter of this year, the occupancy rates at
the Atlantis grabbed analysts' attention.
Monarch said its rooms were 97.4 percent
occupied during the quarter, and every room
of the hotel was filled during five major conventions
during the quarter.
That, in turn, pushed average room rates
upward to an average of $66.52 a day compared
with $60.55 in the third quarter a year
ago, said John Farahi, one of the three brothers
who serve as co-chairmen of Monarch.
So why isn't Monarch, which has been
improving and expanding the property
almost constantly since it was the Golden
Door Motel back in the early 1970s, getting
out the hard hats once again?
For one thing, it feels good to pay down
debt, said Ben Farahi, another of the company's
co-chairmen.
On Sept. 30, Monarch's long-term debt
totaled $54.5 million. That's down from
$64.2 million a year earlier. Equally important,
the combination of a lighter debt load
and lower interest rates meant that
Monarch's interest expense during the third
quarter fell to $962,373 from $1.6 million a
year ago.
"We are in no hurry to load up the balance
sheet with more debt," Ben Farahi said
last week.
But "no hurry" doesn't mean "never."
Monarch has city approval to add 500 rooms
to its existing property. In addition, the company
owns 15 acres directly west of the
Atlantis. That land is zoned for gaming and
could support another 1,500 rooms in a separate
property. Ben Farahi said the company
might launch an expansion project in 12 to
18 months.
By then, the Atlantis will have an even
better feel for the effects of the newly
expanded Reno-Sparks Convention Center,
just south across Peckham Lane from the
hotel.
"We are very enthusiastic about the number
of events planned for the convention
facility," Ben Farahi said.
Along with conventions, the Atlantis targets
locals, particularly in the south Reno
neighborhoods that the company estimates
are growing at about 6 percent annually, and
drive-in tourist traffic.
The company has aggressively marketed
itself in markets within 200-400 miles of
Reno, and its selling and administrative
costs rose by about $1 million in the past
year.
But Monarch officials noted that the
aggressive marketing is paying off as the
Atlantis is grabbing a bigger piece of the
Reno gaming market.
Casino revenues at the Atlantis were up
11.6 percent to $18.9 million during the
third quarter compared with the same period
a year ago.
Elsewhere in Reno, gaming revenues
struggled to stay even during the summer
months.
Even though expansion is a ways off, the
company plans to invest somewhere
between $4 million and $6 million probably
closer to $6 million on renovation
and improvement of the Atlantis in the next
year.
"We are trying to keep the product
fresh," said Ben Farahi.
The Atlantis includes 980 guest rooms;
its casino includes about 1,500 slot and
video games along with table games, a sports
book, keno and a poker room.
For the first nine months of this year,
Monarch reported earnings of $7.3 million,
or 77 cents a share, on revenues of $96.9
million.
That compares with net of $4.4 million,
or 47 cents a share, on revenues of $90.6
million in the same period last year.
