Rising costs squeeze Monarch
Monarch Casino & Resort Inc. got squeezed from the south and from the north during the fourth quarter, and the result was a 20.7 percent decrease in its profits from a year earlier.
From the south, the owner of Atlantis Casino Resort Spa got squeezed by disruption from a $50 million expansion project that’s adding 116,000 square feet of casino, restaurant and ballroom space to its facilities.
From the north, the Atlantis faced a big marketing push by its nearest competitor, The Peppermill, which opened a $400 million expansion. The Atlantis needed to boost its own marketing spending to keep pace, said John Farahi, Monarch’s chief executive officer and co-chairman.
For the quarter, Monarch posted income of $4.05 million compared with $5.12 million a year earlier. Revenues for the quarter were $36.9 million compared with $37 million.
Adding to the quarter’s headaches were higher legal expenses as Monarch tangled over use of the “Atlantis” name. Kerzner International Ltd., which operates Atlantis Paradise Island in the Bahamas, filed suit a couple of years ago to bar Monarch from using the name anywhere but Reno and specifically not in Las Vegas.
And then, too, Farahi noted that the softening regional and local economies left customers with less money to spend in the company’s casino and restaurants.
“We anticipate that upward pressure on expenses will persist as long as we must continue addressing the adverse effects of the negative macroeconomic environment, construction disruption, the marketing programs of our nearest competitor and protecting the company’s rights in the Kerzner lawsuit,” he said.
And even though profits were pressured by higher expenses, Farahi noted that Atlantis’ revenue was close to year-earlier levels.
For all of 2007, Monarch reported a net of $24.5 million and revenues of $159.9 million. That compares with income of $22.1 million and revenues of $152 million in 2006.
The expansion project, Farahi said, is on track for completion in June. The company also started construction of a $12.5 million skybridge across Peckham Lane to connect Atlantis to the Reno-Sparks Convention Center. That job is expected to be complete late this year.
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