Cosmo has never turned a profit & about to be sold for a major loss?

[artedm]

amazing with how expensive everything is there:
http://www.bloomberg.com/news/2014-0...as-resort.html

[jmiller]

I think thats one of their main problems..everything is too expensive. I understand vegas is expensive, but why would you stay at the cosmo when you have so many other nice hotels for cheaper. The cosmo was my first choice for my upcoming trip in may...until i priced everything out...

[Brooklyn Marc]

Remember when it was first slated to be built it was mainly going to be a condominium development, they switched business models right in the middle of the building process and started building a casino literally at the worst time in American history for building large or small structures. Somebody is going to make out like a bandit buying that place if they do it for the right price. Good post artedm.

[BigPimp]

I think thats one of their main problems..everything is too expensive. I understand vegas is expensive, but why would you stay at the cosmo when you have so many other nice hotels for cheaper. The cosmo was my first choice for my upcoming trip in may...until i priced everything out...

I would be interested to know if the losses were the result of vacancies or the result of the interest expense on the debt (the extra $2.1B the hotel cost to construct is likely a majpr contributor to the annual losses). Anyone know if $100MM is the norm for EBITDA for a resort the size of Cosmo in Vegas?

[WC_racer]

Hopefully prices are more affordable.

[ArmyVegas]

Hopefully prices are more affordable.

I'm hoping that too. Maybe I should hold off on booking hotel rooms for Jul/Aug for maybe a month. See if panic sets in....lol

[Brooklyn Marc]

I would be interested to know if the losses were the result of vacancies or the result of the interest expense on the debt (the extra $2.1B the hotel cost to construct is likely a majpr contributor to the annual losses). Anyone know if $100MM is the norm for EBITDA for a resort the size of Cosmo in Vegas?

Big Pimp you are exactly correct good call,its probably a combination of the two. In order to complete construction during the credit crunch the terms on the debt ballooned considerably since anybody lending out that much money definitely wasn't lending it cheap. I don't know the exact annual interest and or length of the bond issue used to complete it (i can look it up later), but i do know Deutsche Bank upon foreclosing became the primary creditor and therefore even though the casino was operating at "a loss" at the end of the day the fact that the Cosmo didn't go bankrupt means that they weren't in default on any loans and were paying out the ass from whatever revenue they were making annually to satisfy the debt.

[ratchelor]

Wouldn't hold my breath on room prices dropping. Revel in AC had filed for bankruptcy like twice and those rooms are still a shitload.

If I was a bank I'd charge such a high interest rent to lend to these casinos, Cosmo is filing for bankruptcy and economy is pretty good, imagine another downturn how many would file

[Brooklyn Marc]

Yup, you can't justify lowering room rates with a price tag that big, good example, the Revel is basically the Cosmo of Atlanic City, except they made waaaay less than Cosmo did.

[PorkChopExpress]

I would be interested to know if the losses were the result of vacancies or the result of the interest expense on the debt (the extra $2.1B the hotel cost to construct is likely a majpr contributor to the annual losses). Anyone know if $100MM is the norm for EBITDA for a resort the size of Cosmo in Vegas?

That EBITDA is very small - consider that Las Vegas Sands (which owns the Palazzo and Venetian) had year-end EBITDA of $4.76 billion. That's with a B. Even if a fair amount of that figure comes from its Macau properties, the Cosmo' earnings are soft in comparison.

While I don't work for Deutsche bank, I know a few industry guys who have said that the bank never in its wildest dreams could hope to make their money back they invested in the property (which if I recall was more than the $2 billion they are asking for now) after the developer defaulted on their loans. They have wanted to unload it for some time.

In many respects, the Cosmo has a lot going for it - it's hip, draws a great crowd, great views of the fountains, etc., but it has a lot of drawbacks that don't make it profitable: it's crushed into a tiny space compared to Likes of the Bellagio, Wynn, the Venetian, or even the Aria. Rooms are pricey, and not as large as other high-end properties. The layout is awful, the casino is tiny, and they don't take in nearly the profit that other places do on gambling.

It'll be interesting to see what happens.

[AusVIP]

I actually think the location is fantastic. Its jus the crowd that it draws are more conducive to going out and partying than gambling hard. I dont know how many big "whales" they get.. but it caters toward a different crowd.

I think it has a great deal going for it.

[SelfMade]

Room prices are not going to drop.
The occupancy rate is not the issue, it's the lack of gambling.
You don't survive in Vegas if you can't fill your casino no matter if everything else is hot.

[Tara Denise]

Any casino that isn't attached to one of the established awards programs is gonna have a real struggle getting people to gamble there. Cosmo attracts plenty of hotel guests and party goers, but there isn't much reason for gamblers to go there and they don't do anything to entice inexperienced gamblers to pick up the habit. I just hope whoever takes it over eventually figures out what to do with the place, there's a ton of potential.

[pantlessbellman]

It's a great hotel for partying and drinking, I actually loved the Casino the first time I went there (I cleaned up), more recent trips have seen ultra high minimums and I just aint that big of a player. The Casino is also small and not conducive to whales, Wynn, Aria and Encore were all built for whales, hell I even have heard of private baccarat casinos on the upper levels of Palazzo and Wynn, for whales. The people who are betting 10,000+ a hand don't want to be in view of the public as they bet more money than some people make in a year in single hands, unfortunately Cosmo's high limit room doesn't really provide the needed privacy for those whales, not to mention their marketing team doesn't have the players lists of M Life. I see it getting absorbed by M Life or another casino with other casinos in the US and abroad. The investment will never be recouped by Deutsche bank, they knew that, they took it over to try to get the most they could selling it unopened and unproven in the shit economy would of lost them a shit ton more.