The Cosmopolitan of Las Vegas, which is in the process of being sold by Deutsche Bank to the Blackstone Group, after quarters of despair finally showed a glimmer of hope—although by the final tally, it still lost money in the second quarter.
But let's take a deeper look at what is going on at the hotel.
According to reports, the hotel grew revenue almost 17 percent in the second quarter, paring down its quarterly loss. The Strip resort, which operates as Nevada Property 1, said it lost $13.6 million in the quarter that ended June 30. In the same quarter a year ago, the hotel-casino lost $25.2 million. Hotel revenue rose to $80.77 million in the quarter compared to $71.23 million last year.
The reality: The Cosmopolitan, which opened in December 2010, has never reported an annual profit. This time around, revenue increased in all aspects of the resort operations, but not enough to swing it to a profit.
Overall revenue was $200.1 million, bolstered by a 67.6-percent increase in gaming revenue. Hotel revenue grew 13.5 percent, food and beverage revenue was up 2.5 percent and other revenue increased 12 percent.
"Our strategy at the Cosmopolitan of Las Vegas has proven that we are on the right trajectory, as demonstrated by our substantial growth in gaming," said Cosmopolitan CEO John Unwin. "Our second quarter 2014 financial performance affirms that the [hotel] and guest experience continue to resonate, and we are extremely pleased to see our unique approach to the Las Vegas market translate into the strong numbers reflected in our earnings report."
In the first half of the year, Unwin said the resort is outperforming the Las Vegas market in both average daily hotel room rate and revenue per available room, a non-traditional reporting figure.
In May, Deutsche Bank sold the resort to the Blackstone Group for a reported $1.73 billion in cash. At the time, JP Morgan gaming analyst Joe Greff said that Blackstone is paying nearly 17 times The Cosmopolitan's 2013 cash flow of $103 million, hinting at a high valuation of other upscale Strip companies such as Wynn Resorts and MGM Resorts International. "We also think this announcement speaks to a historically smart real estate buyer making a statement on the length of the Las Vegas Strip recovery, also a positive," Greff said.
While not gaining the same fanfare as The Cosmopolitan, The Ritz-Carlton, Rancho Mirage recently opened after years of speculation if it ever would.
So, how has that hotel fared? "I couldn’t be more thrilled by the warm welcome that has been extended to the resort by the community," GM Doug Watson told The Desert Sun. "We are overjoyed to be here. Summer business has been steady, and we look forward to our first full season."
However, the Sun goes on to report that "despite the positive performance reviews, city leaders are providing no way to statistically support that their contention that the taxpayers’ investment in the hotel will pay off for the community."
Transient occupancy tax (TOT) figures from Ritz are kept confidential under the revenue-sharing agreement between the developers and the city, it said.
The incentive loan program, which officially kicked in when the hotel opened May 15, is expected to be worth up to $20 million, with as much as $15 million of that coming from bed taxes guests pay when they stay at the hotel.
According to city figures, the total TOT collected by the city in June, the first full month that the Ritz was open, was up 10 percent over the same period in 2013.
The hotel first opened in the 1980s, and was later converted to The Lodge at Rancho Mirage. The hotel closed for renovations in 2006, but construction came to a halt in 2008 during the financial crisis. Construction resumed in 2013, leading up to the 260-room hotel's May opening.