(click to enlarge) MCRI is operating in an industry with medium to low barriers to entry. This may m

Monarch Casino Resort Inc. ( MCRI ) owns and operates the Atlantis Casino Resort Spa, a hotel and casino facility in Reno, Nevada, and the Riviera Black Hawk Casino in Black Hawk, Colorado. At its current valuation, we believe that expansion efforts will eventually pay off, for both the company hotels in banff alberta and its shareholders. We base this assertion on Monarch's ability to find and develop prime real estate, utilize its niche of pricing power, and maintain its strong fundamentals.
The Atlantis features approximately 61,000 square feet of casino hotels in banff alberta space, 824 guest rooms and suites, eight food outlets, two espresso and pastry bars, a 30,000 square foot health spa and salon with an enclosed year-round pool, two retail outlets offering clothing and traditional gift shop merchandise, an 8,000 square-foot family entertainment center, and approximately 52,000 square feet of banquet, convention and meeting room space. The casino features approximately 1,450 slot and video poker machines, approximately 38 table games, including blackjack, craps, roulette, and others, a race and sports book, a 24-hour live keno lounge and a poker room.
(click to enlarge) MCRI is operating in an industry with medium to low barriers to entry. This may mean that MCRI doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. Nonetheless, high, yet sustainable gross margins allow heavy investments in R D and sales, general and administrative expenses. The Atlantis Hotel and Casino has been able to consistently grow both its revenue and earnings year after year. In fact, it's rated as the second best hotel in Reno, Nevada, and has received exceptional reviews over time.
A heavy promotional environment in the Reno-Sparks area makes competition fierce. Nonetheless, downtown properties are losing market share to Atlantis and Peppermill, another luxury hotel. Increased competition from central California casinos hotels in banff alberta such as Red Hawk casino, which is located near Sacramento on Highway 50, and the Thunder Valley Casino located near Sacramento off of I-80 are potential threats to the Atlantis's prospects. Red Hawk casino opened in December 2008 and has 2,000 slots and 75 tables, but currently does not have any hotel rooms. The Thunder Valley casino has 3,000 slots and 124 tables, and recently added a 297 room, 12 story hotel in July 2010. Rohnert Park, which is expected to open in late 2013 with 3,000 slots, is slightly north of San Francisco.
Although competition remains fierce, Atlantis is consistently gaining market hotels in banff alberta share. Over the last 17 years Atlantis has continued to outperform other competitors in the Reno-Sparks market by providing exceptional service and amenities. hotels in banff alberta Granted, market share increases have been slow. However, in the competitive ecosystem of the casino industry, hotels in banff alberta we believe that slow and steady will win the race.
(click to enlarge) On April 26, 2012, Monarch acquired Riviera Black Hawk, Inc., the owner of the Riviera Black Hawk in Black Hawk, Colorado, which is located approximately 40 miles from Denver, Colorado. The Riviera Black Hawk, which opened in 2000, is the first casino encountered by visitors arriving from Denver, Colorado, on Highway 119 and features approximately 32,000 square feet of casino space, 750 slot machines, 10 table games, a 250 seat buffet-style restaurant, a snack bar and a parking structure with approximately 500 spaces. Monarch owns a 1.5 acre land parcel hotels in banff alberta contiguous to the Riviera Black Hawk casino, which is zoned for gaming and can be utilized for future expansion. Monarch's initial focus with the Riviera Black Hawk is to maximize casino and food and beverage hotels in banff alberta revenues. There are currently no hotels on the property.
Monarch has evaluated all aspects of operations and is in the process of implementing certain operational changes, hotels in banff alberta which are believed to enhance guest experiences and reduce costs. MCRI has also started to develop a master plan of future improvements to the Riviera Black Hawk, which are expected to include, among other things, a property-wide renovation, including renovations of all casino, restaurant, public areas and, subject to final evaluations, construction of a new multi-story parking facility, a hotel and related property amenities.
(click to enlarge) Similar to the Reno-Sparks area, the Black Hawk area is heavily competitive as well. Nonetheless MCRI operates Riviera hotels in banff alberta in a desirable market area, as it is only 35 miles away from the Denver metro area. There is also no tribal casino competition, with only two tribals in southwest Colorado and they are around a 400 mile drive from Denver. The Denver metro area median household income is $59,000, 17% higher than the $51,000 national average. The Black Hawk gaming market hotels in banff alberta has grown 18 out of the 20 years it has existed.
This type of ecosystem is essential to Riviera's prospects. Although the market is immature, most properties are built to cater to day-trippers; creating an opportunity for resorts. Riviera Black Hawk casino is also in a premiere location, as first property guests encounter it from Denver on Highway 119. Also, an extremely limited hotels in banff alberta availability of developable parcels are sound for gaming.
When comparing the Black Hawk to the Reno-Sparks area, both ecosystems are similar. The Black Hawk Central City market has increased, while the Reno-Sparks market has decreased. The two markets were approximately equal in 2012 with Reno-Sparks exceeding Black Hawk by approximately $5 million in YTD 2013. In short, the Riviera Black Hawk acquisition was a valuable one, as earnings improvements were instantly shown. EBITA increased 43% from 2012 to 2013, largely thanks to the acquisition, just in its first year of ownership.
Catalysts An improving economy allows less frugality hotels in banff alberta amongst Americans, leading to increased consumer spending and confidence on luxury services such as resorts and casinos. hotels in banff alberta Consumer spending is an important driver of the industry, so when it begins to fade as a result of people having less money in their pockets to spend, the economy is at a risk of decelerating. MCRI is also able to utilize a small niche found in its property location, as the Riviera Black Hawk casino facility is located in a wealthy area. The psychology behind consumer confidence and spending is quite simple, as the less money people have to spend, the less likely they are to play their role as consumers. hotels in banff alberta Now that the economy has begun to recover and more people have become employed, allowing them to spend more. There are opportunities to drive shareholder value through hotels in banff alberta conversion of Riviera Black Hawk to a full-scale resort. The master development plan would nearly double the existing casino space, fixing the crowding problem some clients have complained about. The resort addition would add a 507 room hotel tower, hotels in banff alberta four restaurants and additional bars, a 10-story parking structure with around 1,500 spaces, and a spa and pool facility. Upgrades and expansions to the Atlantis facility over the last few years have developed a reputable name for the resort. Customers are likely to return, and reviews for the resort are positive for all groups of people, from individuals, to families, to couples. Low capital requirements hotels in banff alberta after the $95 million reinvestment to the Atlantis facility allows smarter utilization of generated cash in the future, to perhaps pay a dividend or continue share buybacks. Difficult market conditions in Northern Nevada due to recessionary macroeconomic factors and heavy competitor promotional activity have begun to subside, as Atlantis continues utilizing hotels in banff alberta its niche in the Reno-Sparks area and maintains its reputability.
Risks Monarch competes with numerous casinos and hotel-casinos of varying quality and size in its markets. MCRI also competes with other non-gaming resorts hotels in banff alberta and vacation destinations, and also with various other casino and other entertainment businesses. The casino entertainment business is characterized by competitors that vary considerably in their size, quality hotels in banff alberta of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. Monarch competes directly with other casino facilities operating in the immediate and surrounding market areas in which they operate. In some markets, hotels in banff alberta MCRI faces competition from nearby markets in addition to direct competition hotels in banff alberta within their market areas. As competitive pressures increase, other casinos in Monarch's markets may intensify their marketing efforts. Increased hotels in banff alberta competitive pressures in the local markets could adversely impact their ability to continue to attract local residents hotels in banff alberta to the Atlantis and the Riviera Black Hawk or require them to use more expensive, and therefore, less profitable promotions to compete more efficiently. In recent years, with fewer new markets opening for development, competition in existing markets has intensified. MCRI has invested heavily in expanding the Atlantis, and also plans to renovate and expand the Riviera Black Hawk. Monarch's competitors have also invested in expanding existing facilities and developing new facilities. This expansion of existing casino entertainment properties, the increase in the number of properties and the aggressive marketing strategies of many of Monarch's competitors has increased competition throughout the industry. In particular, the expansion of casino gaming in or near any geographic area from which Monarch attracts or even expects to attract a significant number hotels in banff alberta of Monarch's customers could have a significant adverse effect on the company's business, financial condition hotels in banff alberta and results of operations. We also believe that the legalization of additional land-based casinos in or near any major metropolitan area in the Atlantis's or Riviera Black Hawk's key non-Reno or non-Denver marketing areas could have a negative impact on MCRI's prospects. Lastly, compe