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Nevada Hotel Revenue Down

The news from Nevada continues to paint a bleak picture as the economic recession impacts visitor and hotel occupation rates in the gambling state.
 
Statistics released by the Nevada Gaming Control Board show that major hotel-casinos suffered a huge drop in net income in fiscal 2008, bringing in $721.2 million...only a third of what they netted in the previous (2007) year.

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The report reveals that 266 resorts grossed $25 billion but were hammered by increasing expenses during the fiscal year ending last June 30. The net income is just 2.9 percent of the gross, down from 9.1 percent in fiscal 2007.
 
While payroll totals were down slightly in fiscal 2008, there were big jumps in interest expenses and in a catchall "other" category that includes various legal expenses, insurance premiums and other items.
 
The gain in interest expenses reflects borrowing at higher interest rates and some debt-laden private equity buyouts of major resort properties.
 
The annual "Gaming Abstract" report also shows that casino departments at the big resorts had a total of $132.2 million in bad debt expenses and $2.2 billion in complimentary services to high-rolling gamblers.
 
The combined expenses of casino, rooms, food and beverage departments increased by 16.2 percent from year to year, while total revenue decreased 1 percent and net revenue decreased by 68.6 percent.
 
"This reflects both the national and global economy," Control Board analyst Frank Streshley said. "During the first half of the fiscal year, revenues were still growing. But the second six months was the start of our current decline and we saw a material downturn."
 
Streshley also noted that the slump in the January-June 2008 period wasn't as bad as the decline since then.
 
The net income numbers include state, but not federal, taxes which will further impinge on profit. The clubs paid $913.2 million in state gambling tax and license fees. Federal taxes can take up to a third or more of the net revenues.



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