Atlantis parent struggles with economic slowdown
Plunging hotel revenues played a big part in the earnings decline reported last week by Monarch Casino & Resort Inc., the Reno-based parent of Atlantis Casino Resort Spa.
The company reported earnings of $4 million on net revenues of $38.8 million for the third quarter, down from the $8 million it earned on revenues of $43.6 million in the same quarter a year ago.
The earnings, which translate into 25 cents a share, exceeded analysts’ expectations of 21 cents.
The publicly held company’s financial statements for the quarter show that hotel revenues, which account for roughly 16 percent of its business, dropped sharply as the national economy and higher gas prices cut into visitor numbers.
Monarch said its hotel revenues during the third quarter fell 21 percent totaling $6.3 million compared with $8 million a year earlier. The company was able to reduce the operating costs of its hotel business by only about 9 percent.
Casino revenues fell by 7.7 percent, the company reported, and food and beverage sales fell by 3.6 percent. The casino at the Atlantis accounts for more than 70 percent of the property’ business.
John Farahi, chief executive officer and co-chairman of Monarch, said the expenses of running the casino rose by $760,000 compared with a year earlier, largely because Atlantis provided more comps to players.
Generally, he said Monarch continues to row upstream against the swift currents of weak national and local economies and aggressive marketing and discounting programs by other properties in the region.
Monarch also continued work during the third quarter on its $12.5 million skybridge across Peckham Lane to link Atlantis to the Reno-Sparks Convention Center. That work is scheduled for completion this year.
Farahi said the company also continues to invest in an upgrade of the Atlantis after it completed a $50 million, 116,000-square-foot expansion project in July.
“Guest feedback on these recently opened facilities has been extremely positive,” he said.
To pay for the projects, Monarch borrowed another $8.5 million from a $50 million credit line, and its borrowings now total $42.5 million. The company paid nearly $83,000 in interest during the third quarter.
As the economy weakened, Monarch kept a tight rein on its administrative costs. Selling and general and administrative expenses of $12.7 million were essentially flat compared to the same quarter a year earlier.
For the first nine months of this year, Monarch has earned $9.1 million on revenues of $108.4 million. A year earlier, it earned $20.4 million on revenues of $122.9 million.
The cancelation of the 2020 event “severely affected operating revenue,” according to the Great Reno Balloon Race.