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LAS VEGAS-The Riviera resort here suffered mightily in the second quarter, according to owner Riviera Holdings Corp., which filed its earnings report with the SEC earlier this week. The locally based company has been in default of its credit agreement for several months now but has not yet filed for bankruptcy protection.

The budget-oriented Riviera resort on the Las Vegas Strip experienced a 1,100-basis-point drop in average occupancy in the second quarter to 76.5% from 84.6%. For all hotels in the city, average occupancy in June was 86.5%The average daily room rate in the second quarter fell 35.9% to $58.02 from $90.53 in the same year-earlier period. For all hotels in the city, the average room rate in June was $84.50.Riviera says the decrease in the average room rate was due primarily to a decrease in leisure segment room rental rates, which fell 50.4% to $41.06 from $82.82 in the same year-earlier period due to heavy price competition between hotels. The Riviera’s revenue per available room fell 42.1% to $44.39 from $76.63 in the same year-earlier period. As a result, Riviera’s room revenues dipped 36% to $8.7 million from $13.6 million in the same year-earlier period.

Riviera casino revenues in the second quarter fell 16.6% to $12.3 million from $14.8 million in the same year-earlier period. Slot machine revenue dropped off by 12.6% while table game revenue fell by 25.7%. Food and beverage revenues fell 23% to $4.9 million from $6.3 million for the comparable period in the prior year. Entertainment revenue fell 41.2% to $1.4 million from $3.3 million in the same year-earlier period.

Overall net revenues from the Riviera in the second quarter fell 27.9% to $24.9 million from $34.5 million for the comparable prior-year period. Income from operations in the second quarter fell 80% to $800,000 from $4.2 million in the same year-earlier period. Riviera says the decrease in income from operations is principally due to “decreased net revenues not offset with equivalent reductions in costs and expenses.”

In addition to Riviera resort, Riviera Holdings also owns a casino in Black Hawk, Colo. The company has been in default of its $245-million credit agreement since February. In March, the company acknowledged “substantial doubt” about the company’ s ability to continue as a going concern, saying it will have to file for Ch, 11 bankruptcy protection from creditors if it is unsuccessful in renegotiating the loan terms with its creditors.

As a result of the defaults, the interest rates on its debt have gone up. The term loan interest rate is now 10.5% and the revolver interest rate is now 6.25%. The company also has incurred approximately $2 million in default interest charges through the first half of the year.

Riviera also has received a notice of default in connection with its credit swap agreement. Late last month, Wachovia sent Riviera a notice of early termination of the swap agreement as a result of the default and now claims that the amount due under the swap agreement is $26.6 million.

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