Negatives, Losses, and Bankruptcy - Oh My!

In the not-so-shocking news of the weekend, both Riviera and Hooters are teetering on bankruptcy. Let's tackle these properties one at a time.

Apparently Hooters has lost $3.9 million over the first quarter of 2010 (per the Las Vegas Sun). I can't say this is particularly shocking as Hooters has been rumored to be up for bankruptcy and ready to be purchased at any time. The Hooters casino is a gimmick and its location is not good to get foot traffic. In a down economy, your location in Vegas can make or break you, and Hooters has a bad location. I have had friends stay here, while in college, who left very unimpressed and don't want to go back. If you can't even appeal to a college student, who can you appeal to? Unlike the Riviera below, I don't think very many people would miss Hooters. Hooters says bankruptcy is possible.... how about inevitable?

The Las Vegas Sun reports (Click Here) that Riviera Holdings, which also owns the Riviera in Black Hawk, CO is teetering on bankruptcy. Net revenues were down almost $4 million from the same quarter last year. Revenues in Black Hawk were up $0.1 million. I don't like the Riviera, and I think it's a dump. I have never enjoyed playing there, and if you consider the remaining "original" strip hotels that still exist, it's probably my least favorite. I have always enjoyed the Sahara and the Tropicana, even as they've seen better days, and I'd still rather go into Circus Circus than the Riviera.

That all being said, I would like to see someone try to infuse some capital into the Riviera and make it modern. We've lost many of the originals like The Sands, The Dunes, The Desert Inn, The Stardust, and The Thunderbird, and I am not interested in seeing more go, even the Riviera. But the Riviera, unlike the Tropicana, suffers from poor strip location that could make a remodel irrelevant. The Riviera sits on a large parcel of land for a small hotel, so if someone did want to tear it down, the land could be enticing. Regardless, it appears that Riviera, as it exists now, isn't long for Las Vegas Blvd.

The Strip seems to be condensing. Riviera is in trouble, Sahara is offering $1 blackjack and $1 rooms, Fountainebleau remains unfinished, and Circus Circus loses money for MGM. With the empty lots that used to be The Stardust and The Frontier, at this point, it seems that the northern most point of the strip is Wynncore. I would love to see the north revitalized on the empty lots while preserving the history in the older places. Time will tell if more growth can happen on the Strip, but for now, for my purposes, the Strip is really Encore to Mandalay Bay.

The Under-Reported Story of the Year

This week Perini, the folks contracted to build CityCenter, wrote a letter to the Governor of Nevada asking him to step in and help them secure approximately $500 million that is owed to them by MGM Mirage (or MGM Resorts International, whatever). Embedded in the letter is a small point that the CityCenter condos are closing at an alarmingly slow rate. The letter cites the source below:

http://www.lvbusinesspress.com/articles/2010/04/12/opinion/columnists/stutz/iq_35200068.txt

Really? Only 25 condos out of 2,400 have closed since CityCenter opened? I understand that we are in a recession and Las Vegas is particularly bad off, but that rate is cause for concern. That means 1% of condos have closed when CityCenter should be at the height of interest. This makes me wonder if they will consider turning some of the Vdara or Mandarin Oriental condos into hotel rooms. Not that CityCenter needs the trouble of selling out additional rooms.

With the struggle to sell condos and hotel rooms, I think it will be a long time before we ever see the Harmon Hotel at CityCenter open, and I bet MGM is breathing a huge sigh of relief that they were able to cut the condos out of the Harmon. I wonder if Jim Murren ever wishes he could have a do-over on Harmon, Vdara, and Veer. I just don't see how they fit into today's economy.