Friday, November 13, 2015

SLS Losses Mount in Third Quarter

A filing today with the SEC revealed that SLS Las Vegas had a net loss of $38.7 million in third quarter 2015.

SLS managed only $33.55 million of net revenue in the third quarter, which was down from $36.9 million of net revenue in the second quarter.

I like to compare SLS with somewhat similarly located Circus Circus, which managed almost double the net revenues that SLS did in the third quarter - $62.6 million.

Casino revenue at SLS was up slightly from the second quarter to the third ($9.5 million to $9.9 million). Almost every other category of business was down sequentially though.

Hotel revenue dropped from $13.1 million to $12.3 million. Food and Beverage dropped from $16 million to $13.6 million. Retail and other dropped from $1.3 million to $900,000 (likely explained by the Fred Segal departure).

Year to date the property has racked up a net loss of $122.7 million.

Parent company Stockbridge has now contributed $59.3 million this year to keep the hotel operational. That means they poured in an additional $31 million in the third quarter.

Based on these poor financial results it would seem like SLS would be on the verge of closing. However, the announcement that W Hotel will be taking over one of the hotel towers seems to indicate that SLS (backed by Stockbridge) will be around for a while.

If I had to guess - I think Stockbridge will likely make a few more deals similar to the W Hotel deal, essentially outsourcing different parts of the property. I wonder if a casino management deal with one of the regional players looking to get into the Vegas market might be on the horizon.