Riviera Reports Results for Q1

LAS VEGAS – (PRESS RELEASE) -- Riviera Holdings Corporation (Amex: RIV) today reported financial results for the first quarter ended March 31, 2006. Net revenues for the quarter were $51.7 million, down $775,000 or 1.5 percent from the first quarter of 2005. Income from operations was $7.8 million, down $968,000 or 11.1 percent from the first quarter of 2005. Included in operating income in the first quarter of 2005 was a $1.0 million exclusivity fee from a prospective purchaser of the Company. Adjusted EBITDA(1) was $11.6 million, in the first quarters of both 2006 and 2005. Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization, equity-based compensation, asset impairments, Sarbanes-Oxley Act expenses, and mergers, acquisitions and development costs, as shown in the reconciliation to net income in the tables of this release (See Notes 1 and 2 to the Financial Summary table). Net income for the quarter was $1.3 million, or $0.11 per share, down $858,000 or 40 percent from the first quarter of 2005 when net income was $2.1 million, or $0.18 per share.

First Quarter 2006 Highlights

* Riviera Black Hawk Revenue was up $146,000 or 1.1 percent

* Riviera Black Hawk EBITDA was up $249,000 or 6.3 percent

* Riviera Las Vegas RevPar (Revenue Per Available Room) increased $7.55 to $76

* Riviera Las Vegas Revenue was down $921,000 or 2.3 percent

* Riviera Las Vegas EBITDA was down $386,000 or 4.4 percent

* The Company has $29 million in cash plus a $30 million revolver

Riviera Las Vegas

Robert Vannucci, President of Riviera Las Vegas, said, "Although our first quarter EBITDA was slightly below the prior year's first quarter, it was our second best first quarter since 2000. The slight decline can be attributed to a soft Super Bowl week. NFL restrictions, imposed over the past several years, have limited the activities we can offer which impacted the repeat business we typically experience during that week.

"Gaming revenues in Las Vegas were down $565,000 in the quarter. This can be attributed to a soft Super Bowl, an increase in convention room nights mix, a decline in leisure room nights, as well as fewer entertainment covers (tickets sold).

"Total room revenues were $14.1 million up $1.4 million, or 11 percent over the same quarter of the prior year. ADR for the quarter was $83.60, an increase of $10.77 or 15 percent compared to a year ago. Convention room nights comprised over 37 percent of the total rooms sold in the quarter, an increase of 11.5 percent. Convention room revenue increased by $1.2 million or 21 percent over the first quarter last year and accounted for 47 percent of total room revenue. We continue to see strong demand for our rooms.

"The initial gaming revenue results generated by our Westward Ho marketing agreement, signed in December of last year, have been favorable. We expect to see this part of our gaming business continue to develop and grow into the future.

"The Las Vegas market remains strong. Through February of this year, visitor volumes increased 2.6 percent over last year to 6.1 million visitors. Citywide occupancy increased 1.7 points to 88.2 percent. Rooms occupied by conventioneers increased by 4.2 percent to over 3.4 million room nights. Total airline passengers increased 6.1 percent to over 6.8 million. We believe the market has fully absorbed the increase in room inventory created by new property openings and hotel additions."

Riviera Black Hawk

Ron Johnson, President of Riviera Black Hawk, said, "We are pleased with first quarter results in Black Hawk. Net revenue, EBITDA and EBITDA margin were all up over the same period last year. We are particularly pleased that our EBITDA margin of 31.6 percent grew by 1.6 percentage points during the quarter compared to the first quarter 2005. Our management team in Black Hawk has done an excellent job of raising revenues while continuing to effectively manage marketing expenses.

"The Black Hawk/Central City market showed gaming revenue growth of 2.8 percent in the first quarter. Black Hawk itself experienced a healthy 4.1 percent growth in gaming revenue. It appears that Black Hawk is showing signs of recovering some of the market share it lost to Central City after the opening of the Central City Parkway in November 2004."

Consolidated Operations

William L. Westerman, Chief Executive Officer, said, "I am pleased with the way management responded to the merger negotiations and overcame the distractions created by the speculative activity in our stock. Adjusted EBITDA in this year's first quarter was consistent with that of 2005. However, our operating income for the first quarter of 2006 declined, partly because of a first quarter 2005 negative expense of $667,000 that resulted from the failure of a prospective purchaser to reach an agreement to acquire the Company during an exclusivity period, which was granted in exchange for a $1 million payment.

"On April 21, we announced that Duane Krohn, our Chief Financial Officer, would be retiring effective today. I want to thank Duane for all his hard work and contributions to the Company over the past 16 years. When I first came to Las Vegas in 1991 with no experience in the gaming industry, Duane helped me understand the complexity of the business. He played a major role in our reorganization in 1993 and our several successful debt offerings. He also has patiently responded to the many parties who, over the years, have indicated an interest in acquiring the Company. We wish him good luck and a happy retirement. Until we find a successor for Duane, the Board of Directors has appointed me to act as Interim Chief Financial Officer, in addition to my other duties.

"We will continue to focus our efforts on operating your Company effectively to maintain our competitive position and maximize cash flow."