The New Frontier hotel is recovering from the downturn in tourism on the Strip following 9/11, but the aging casino property in its current state will never realize profits of more than $9 million year, Frontier owner Phil Ruffin told state gaming officials last week.
Ruffin, at a meeting held by the Nevada Gaming Control Board in Las Vegas, said that the Frontier was losing $2 million a year when he bought it from the Elardi family for $165 million in 1997.
The resort’s cash flow reached $8 million a year before the September 11 terrorists attacks disrupted air travel and forced many Americans to curtail leisure and business travel. Ruffin said cash flow dropped to $5 million post-9/11.
As of 2003, business at the Frontier is "starting to pick up," with cash flow coming in at around $6 million to $7 million a year, he said. However, the Frontier "will only get $8 (million) to $9 million maximum a year in EBITDA (earnings before interest, taxes and depreciation)," Ruffin said.
The Frontier, first opened in 1942 and renovated and expanded several times, has 986 rooms, including 400 suites. The rooms are priced for budget-conscious visitors — the average rates are $39 a night for a regular room and $50 for a suite. The hotel’s casino covers 100,000 square feet.
Last week, the board recommended the Nevada Gaming Commission grant Ruffin’s request to refinance a $69 million loan from French banker Societe Generale. The new loan would lower his interest rate and save Ruffin $3 million per year. Ruffin is also paying off a $35 million loan from GE Capital.
Ruffin, a Kansas industrialist and investor, said he still plans to raze the historic Frontier hotel and its casino to make way for a new resort with a price tag of up to $900 million. But he said he’ll need a partner first, and as of this year he has yet to find one.
He told board members he hired Societe Generale to obtain financing for his proposed new resort. Ruffin had been using the bank to raise funds to turn the Frontier into a San Francisco-themed "City by the Bay" resort, but he backed off on the idea after 9/11.
After the board meeting, Ruffin said that New Jersey casino owner Donald Trump is continuing with plans to put up a $300 million, 60-story building with 300 high-end condos on 3.5 acres now used for parking on the Frontier property, across from the Fashion Show Mall. Ruffin would retain a 50 percent interest stake in the Trump project.
However, Trump, as of now has no interest in signing on with his casino plans for the Frontier, Ruffin said.