THE RIVIERA HOTEL/CASINO CAN'T SURVIVE IN TODAYS MARKET

Implications: It was an understandable move on the part of Riviera Holdings to drop the bid most recently afforded them by an investment group. It stands to reason that they could have a bidding war as did the Tropicana when Aztar placed it for sale. The outlook of a sale for $25.00 to $28.00 was not held in much esteem and did not make very much sense to the stockholders. Other properties had sold on and off the Strip for much more. It's only my opinion, however, a bid in the realm of $32.00 to $35.00 a share would create a wake up call for Riviera Holdings. They need to make a major investment into the property or rid themselves of it. The latter is the best of both world for all concerned.

Analysis: The Riviera is located in the north portion of the Las Vegas Strip. In previous years not considered by many as the best or most lucrative spot to operate a hotel/casino. The worm has certainly turned in recent months and a deeper look makes this piece of land a very valuable commodity. The Boyd Group is now underway with their mega resort - The Echelon - it will be directly across the street from the Riviera. Circus Circus has let some rumors fly that they might consider a major face lift for that property. Just slightly down from The Echelon. Hilton has put a high rise condo's and time share next to Circus - the Sahara has finally been sold to an entertainment group out of Los Angeles with plans to take the property out of the dark ages. There is also 25 acres across the street from the Sahara that has yet to be sold and could lead to another hotel property. Taking all of the above into consideration, The Riviera has properly seen fit to allow other bids, thus raising the ante for themselves - good business, I would suggest. 

Having said all of the above, gives rise to the notion that the north portion of the strip is rapidly being transformed into a viable gaming area again. All of the area from the Venetian north was considered as in need of help. Along came Steve Wynn with The Wynn Las Vegas and his new addition in progress, The Encore. Donald Trump seemed happy to put a Trump Tower on the rear section of The Frontier (across from the Wynn) and may be considering a second tower. The owner of the Frontier has already expressed his desire to either build a new property or give the existing place a major jolt. You can now get a better picture of just what must have been on the minds of the folks at the Riviera. It's not brain surgery here, just some good common sense and a bit of trust that the north end of the strip will demand the same type of dollars as the center strip has.

I would think that with a bid in the low to mid $30's might get the job done for Riviera Holdings as they are ripe for a sale - they won't let it be stolen and that is their obligation to their stockholders. It would not surprise me to see a deal made by Thanksgiving of 2007...............