The Cosmopolitan is known for being the most expensive property built on the Vegas Strip. It was opened in December of 2010, and even then many analysts were wondering just how long it would be before the casino made a profit. The casino has been running now for 9 financial quarters and the pricey $3.9 billion casino and resort is using lots of red ink on its ledgers. However, the casino did see good increases in its year-over-year segments during its first quarter.
One reason for its slow move to profits is that many other clubs have opened in the local area. And don’t forget the Vegas skyline is full of properties owned or run by MGM Resorts International, Wynn Resorts Ltd., and Caesars Entertainment Corp. It is tough neighborhood to break into, no matter who you are.
So far, the Cosmopolitan has relied on its revenue from food and beverage sales. Since opening, the resort has generated some $648.5 million. For their first quarter, they earned 40 percent of their gross (or $74.7 million) from food and beverage sales. It can be said that non-gaming venues have been very important to them during these early days.
The casino does understand that maintaining an edge is crucial if the business wants to compete with the other big properties. So far, they have been able to do this with their outstanding restaurants and clubs. Also, the resort plans to add to its event space with a new addition that will be called The Chelsea. The new space will be for events and performances. It is expected to be finished later this year, according to the resort. When finished, The Chelsea will be a 50,000-square-foot venue that will be capable of holding more than 3,000 people.
Only 22 percent of the casino’s gross revenues came from gaming. This is down for the average of Strip properties that come in at about 36 percent (for 2012). The Cosmopolitan as reported that it is already seeking new ways to increase its international hosting services, as well as beginning to build a base of slot machine customers, and that it will be expanding alliance programs in order to earn higher casino revenues.
In addition to having to work hard on its revenue streams, the Cosmopolitan has had to weather some bad press lately when negotiations with the Culinary Union went south. Before it was over, union members and supporters had put together a protest of sorts and blocked a portion of the Vegas Strip. This occurred back in March. The talks between the parties have stalled and include issues such as working hours, pensions, health care, and how many rooms each housekeeper is to clean. Officials of the casino believe that a solution can be reached that will be agreeable to all parties.
If an agreement is not forthcoming, it could impact the resort as some people will not cross and picket line on a moral basis, and others will not want to wade through any blockages that lead into or off of the property.