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Monarch won’t leap into Atlantis expansion

John Seelmeyer

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.