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The Las Vegas-based Tropicana resort and casino recently reported earnings of $1.5 million during the third quarter of 2010. Although there has been a major deterioration in the Laughlin and Lake Tahoe markets where the company maintains three hotel-casinos, the Tropicana still managed to report earnings in the black which could be an indication of economic recovery for the casino industry.

Like many other casinos along the Las Vegas Strip, the Tropicana filed for bankruptcy and created a plan to keep the company afloat. This year, the company emerged from that bankruptcy and posted net revenue of $177.9 million. Currently, the Tropicana is controlled by Carl Icahn, a well-known investor.

In 2009, the numbers were not even close to this. The hotel-casino was spun from bankruptcy by private, unaffiliated investors that are not part of Tropicana Entertainment which includes:

• Casino Aztar in Evansville, Indiana
• Atlantic City Tropicana
• Bayou Caddy’s Jubilee in Greenville, Mississippi
• Lighthouse Point in Greenville
• Horizon Vicksburg in Vicksburg, Mississippi
• Belle of Baton Rouge
• The Tropicana and the River Palms in Laughlin, Nevada
• MontBleu Casino Resort and Spa in Lake Tahoe, Nevada

The Nevada properties reported net revenue of $34.4 million which is down 10.2 percent from 2009’s third quarter numbers. Also, overall slot volumes decreased 16.8 percent.

It has been determined a major factor is the deterioration of the Lake Tahoe and Laughlin markets. This is a result of economic slowdown and a huge reduction in consumer spending. Customers have reduced spending primarily due to uncertainty and instability regarding employment and credit. Overall, the Laughlin market saw a net revenue decline of 2.9 percent compared to the third quarter of 2009.

Overall, the occupancy of Nevada hotels previously set at 71.3 percent increased by 2.6 percent with the average hotel room rate falling 8.3 percent. Since the acquisition of the Atlantic City property for $282 million on March 8^th, the company has generated net revenue of $183.4 million.

Although small, the Tropicana reported a profit during the third quarter of 2010 is a huge step from where they were a year ago. Despite the slumping economy, perhaps it will begin to pick up for the gaming industry. This may be the first step of many back to recovery from bankruptcy, discretionary consumer spending, a collapse of the housing market and poor credit.

The opening of CityCenter Las Vegas brought fun and excitement. Month’s later statistics are showing that there are more hotel rooms in Las Vegas than people to fill them. Evidence is appearing that indicates CityCenter is stealing business from other resorts.

Single-Property vs. Multi-Property Owners

This information is much more detrimental to single-property casinos such as, the Riviera and Tropicana which have more to lose than their competitors like MGM International who own multiple establishments on the Las Vegas strip. In the end, the single-properties are generating less money and have a smaller customer base to market too.

Also, visitors are staying at fancier, more expensive hotels because they have lowered their rates (which are aligned with budget hotels) due to the global recession. Many properties are back in the black, but aren’t making as much as they would if CityCenter wasn’t open.

The Numbers

From January through May of this year there was a 1.5 percent increase in visitation to Las Vegas. On the other hand, the number of overall hotel rooms jumped by 5.6 percent over the previous year. The occupancy rate throughout the city from January to May was 80 percent which is a 10 percent decrease from 2007 when Las Vegas tourism was at its greatest.

The total cost of CityCenter is $8.5 billion. The whole complex continues to struggle, not yet turning a profit. In the second quarter of 2010, an operating loss of $128 million dragged down MGM International’s earnings.  MGM believes that its competitors are losing even more money due to decreased gambling and room revenue.

MGM’s Aria consists of almost 30 percent gamblers. This is higher than any casino and resort in the Las Vegas area. This is due to marketing specifically to the gaming community who are expected to take the place of the traditional business. The gamblers are MGM loyalty program registrants that receive discounts.

Causes of a Decrease in Revenue

The global recession is the primary cause for the decline in the leisure and entertainment business. Also, with the opening of CityCenter, there has been a huge influx of competition in a tight market. Additionally, there is currently an overabundance of convention space but not enough conventioneers to fill it.

The combination of these things adds up and results in a major decrease in business. Casinos and resorts will need to look to new methods if they want to attract new guests and retain the loyal. Promotions and offers don’t seem to have the same effect as they once did. A new idea must be implemented for the gaming industry to jump back on its feet.

Investor Carl Icahn recently made the decision to continue to hold construction of mega-casino, Fontainebleau until the economy vastly improves. He pulled Fontainebleau out of bankruptcy and despite talks of selling the property; he’s decided to hold on to the asset. So far, he’s acquired a $52 million profit on the property.

Icahn has not commented as to whether construction on the property will resume soon. The location of Fontainebleau is at the northern edge of the Las Vegas Strip, between the Riviera and the Sahara.

Construction of the hotel-casino stopped last summer due to bankruptcy from the first developer, Turnberry Associates. The banks halted funding for a $2.9 billion, 3,815-room resort and casino. Due to a poor economy, declining revenue forecasts, a lack of condominium sales and high costs, the company filed Chapter 11. To finish this project, the cost is estimated at $1.5 billion.

Icahn Entertainment’s official response was to hold on to the property until the global economic climate greatly improves. This was stated today during a regulatory filing hearing.

Icahn Entertainment also stated that they’ve completed a fair-value study to ascertain the property’s market-worth. The study used an as-is cost model to compare to other market properties and their sales approaches. The total value of the unfinished property in this market climate is valued at $200 million. $91 million of the total was due to its prime location on the Strip.

Currently, Icahn Entertainment controls Tropicana Entertainment Inc. They have hotels and casinos around the country. The most popular areas are Las Vegas, Atlantic City and Laughlin, Nevada. Recently, the Tropicana in Las Vegas dodged a bankruptcy thus causing it to be partially owned by a separate set of private investors that are not part of Tropicana Entertainment.

The forecast for Las Vegas gaming venues has plateau’d. Although casinos are showing little growth, they are not losing any customers either. This is a clear indication that they have hit rock bottom and can only improve from this point. Holding on to Fontainebleau will prove to be a wise and profitable decision once the economy stabilizes.

Although holding a property with no growth for a significant amount of time can be costly, the long-term benefits greatly outweigh the short-term costs. As the economy improves, more visitors will travel to Las Vegas looking for excitement and entertainment. This property could become a major factor in fulfilling that need.

If you are looking for an alternative to Las Vegas, Atlantic City may be your answer. Atlantic City offers much of the same amenities you will find in Las Vegas. They have several top-notch casino resorts where you can stay, spend some time at the poker tables, get a facial, play around of golf, and enjoy world class dinning. However, Atlantic City, much like Las Vegas, is frequented for its casinos more then anything else, and the city has plenty to offer.

Casinos in Atlantic City

The Trump Taj Mahal Casino Resort

The Trump Taj Mahal Casino is one of the most famous casinos in Atlantic City. The casino is home to the United States Poker Championship. There are over 3,000 slot machines, 210 table games, a smoke-free section, and a separate baccarat room. There are several dining options to choose from at the Trump Taj Mahal Casino included a highly rated steak house and a late night sushi buffet. In addition to a casino, the Trump Taj Mahal Casino hosts a nightclub with live entertainment throughout the year, a spa, and several shopping facilities.

The Tropicana Casino and Resort

The Tropicana Casino and Resort has a large casino with a wide variety of games. The casino covered all of the basics with slot machines, video poker, and table games. There is also a separate room, known as the Jade Palace, which features Asian inspired games like Pai Gow poker. Outside of the casino the resort features several amenities, such as a full service spa, an IMAX movie theater, and a comedy shop. There are over 20 restaurants at the Tropicana Casino and Resort offering dining options from all over the world.

Atlantic City can be just as exciting as Las Vegas and a closer stop for some poker enthusiasts.