San Remo Doing More Business as Hooters

Due in large part to $5.3 million in pre-opening expenses--payroll, training, marketing, advertising, grand opening celebration--the company posted an operating loss of about $4.5 million. In a conference call with analysts, a company official said that if not for extraordinary one-time expenses the operating income would have been $1.7 million.

Casino revenues were $6.9 million in the first quarter, more than double the same 2005 period, wherein the San Remo property generated casino revenues of $3.3 million. First quarter food and beverage revenue increased to $5.2 million from $1.2 million in 2005. Room revenue was $3.3 million, which is $900,000 lower than in 2005 due to the fact that the hotel wasn't open in January.

If you compare only hotel revenue for final two months of the quarter, this year and last, the number is the same $3.1 million. San Remo did it with an average occupancy of 90% and an average room rate of $80. Hooters Casino Hotel did it with an average occupancy of 66% and an average room rate of $115.57.

Hooters Casino Hotel is owned by 155 East Tropicana LLC, whose chief executive is Neil Kiefer. Prior to the grand opening, renovation and re-branding, the hotel was known as the Hotel San Remo Casino and Resort. Through Oct. 31, 2005, 155 East Tropicana LLC leased the hotel and casino to Eastern & Western Hotel Corp., which operated it as the Hotel San Remo Casino and Resort. 155 East Tropicana assumed operational responsibility for the hotel and casino on Nov. 1, 2005 after receiving approval for its state gaming license, and then launched into its renovation and re-branding effort that resulted in Hooters Casino Hotel.

Hotel occupancy was 57% in February and 74% in March. In a conference call with analysts and reporters, CEO Neil Kiefer said those figures were lower than anticipated but expected to improve. One good sign is that in April--the start of a seasonally low period for hotel occupancy in Vegas--occupancy actually rose to 75%.

As with hotel occupancy, Kiefer said revenues off the casino floor could have been better. "We did not do a good job with the physical layout," he said. "We tried to get fancy and it made it difficult to move around and to sit in certain areas, so we completely revamped the floor."

Like Las Vegas in general, Kiefer says 35% to 40% of the resort's customers are coming from California. Like the restaurant chain, younger males are so far making up about 70% of its customer base, says Kiefer, and the Hooters restaurant inside the hotel is "on track to becoming the highest grossing location in the country."

The plan now is to ramp up advertising to let people know it's "not just a big Hooters restaurant," he said.