Las Vegas Hooters hotel-casino files for bankruptcy

2011-08-03

Reading time 1:40 min

(US).- Owners of Las Vegas Hooters hotel- casino filed for bankruptcy this week, listing assets worth us$ 10 to us$ 50 million against liabilities of us$ 162 million. The hotel was re-branded as Hooters in 2006, but has suffered substantial cash flow problems – its casino has never made money - as well as very mixed feedback from customers.

The hotel could be bought out by another Las Vegas casino-hotel owner, but the parent company, 155 East Tropicana, is hoping to restructure its debt Under Chapter 11 of the US Bankruptcy Code and carry on trading as normal. It announced that it will seek a financial restructuring of its current debt through a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code which was filed with the United States Bankruptcy Court for the District of Nevada.

The company had been in extensive negotiations with its primary bondholder, which purchased approximately 98% of the company’s debt at a substantial discount. It no longer believes a pre-negotiated restructuring is possible, and has therefore elected to commence the Chapter 11 process immediately. All hotel and casino operations will continue to operate as usual during the Chapter 11 process, including with respect to employees, customers and vendors.

The company said in a statement: “We are confident that an orderly and transparent Chapter 11 process will provide the company with the opportunity to properly restructure its balance sheet and emerge as a stronger business.”

The Hooters casino-hotel is an extension of a restaurant brand that first appeared in America in 1983. There are now 430 Hooters restaurants and the business was built using scantily clad, sexy women to serve fast food and beer to – inevitably – predominantly male customers.

Its tagline is ‘Hooters makes you happy’ – but the hotel in Las Vegas, according to some of the comments made on travel website tripadvisor.co.uk, doesn’t always fulfil this promise. Out of 1,001 comments, 159 of them rate the resort-hotel as ‘terrible’, 156 as ‘poor’ and 231 as ‘average’. Complaints range from rooms having strange smells to ‘unfriendly’ staff. The amount of money it’s made has been similarly disappointing, with the hotel’s net operating revenue for 2009 down 23.58 %.

An investment group, Hedwigs Las Vegas Top Tier, did attempt to buy the hotel for us$ 225 million in 2008, with the aim of turning it into a ‘lifestyle, entertainment-driven boutique hotel’. However, the deal, which would have included a us$ 130 million re-fit, fell through.