VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
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T:7.08" IN BUSINESS GAMING SPECIAL TAX BENEFIT ALLOWS COSMO TO POST PROFIT By Steve Green senior staff writer The Cosmopolitan on March 23 posted its first profit, saying it earned $72.6 million during the fourth quarter thanks to a special tax benefit. Without the tax benefit, the property would have posted an operating loss of $54.7 million — a number higher than the 2011 quarterly operating losses that had been running in the $45 million to $50 million range. The 2,963-room, $3.9 billion resort opened Dec. 15, 2010, and has struggled to make money because its casino has underperformed in relation to its hotel and food and beverage outlets. In 2011, the Cosmopolitan lost $97 million on net revenue of $478.6 million, the company said. The 2011 loss was reduced by a $138.5 million special income tax benefit that was recognized in the fourth quarter. It was this same one-time income tax benefit that caused the company to report — on paper — its $72.6 million fourth-quarter profit on quarterly net revenue of $120.1 million. While the resort improved its casino revenue, its hotel achieved a strong average daily rate of $237, and the hotel was occupied 84.3 percent of the time. Also, its Marquee nightclub and dayclub was named the highest- grossing bar in the nation last year and is believed to have grossed $70 million. Unlike some properties where the casino is the biggest revenue generator, the Cosmopolitan's largest revenue producer in 2011 was its food and beverage operation ($258.5 million), followed by the hotel ($178.4 million) and the casino ($107.4 million). The Cosmopolitan said in its report that it opened a high-limit gaming area with 15 tables in November and that it's also trying to boost casino results by increasing slot play through the property's Identity loyalty program. Another factor that affected the 2011 results was a high amount of comps provided to customers: $90.3 million. The Cosmopolitan said these comps were necessary to build market share in the early stages of its development and that at some unspecified point, its level of comps will decline to industry norms. With you when you're looking for ways to boost your business S $400ave over on Appreciation Offers1 for small businesses Small Business Solutions Running a business takes a great deal of time and effort. And we'll be here with the resources you need when you're looking for financial solutions to help keep your business moving. For the past nine years, Wells Fargo has loaned more money to small businesses than any other bank,2 which is one reason millions of small business owners choose to work with us. So whether it's financing or managing your expenses, we offer solutions to support you. To find out how we can help your business, visit your local Wells Fargo or call 877-436-4170. 1 Potential savings of "$400 or more" is valid between 4/16/2012 and 6/30/2012, and based on estimated savings on combined fee waivers and rate reduction for the following special offers. Please consult with a banker for details on savings and duration for individual product and services offers. Please also refer to the Business Account Fee and Information Schedule for details on monthly service fee waivers and other discounts. Offers may be modified or withdrawn at any time without notice and may not be transferable. Savings noted above based on standard fees applicable to selected business solutions. Terms and conditions of accounts, products, programs, and services are subject to change. All applications are subject to approval. 2 2010 Community Reinvestment Act government data. © 2012 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. T:12.5"