Supplier News

US – Caesars believes non-gaming revenue will soon eclipse GGR

By Phil - 2 August 2013

Having only managed to narrow its quarterly net loss marginally, Caesars Entertainment said it was looking at other ways to expand with a focus on non-gaming amenities that it hopes will help it poach players from rival properties.

Gaming revenues across Caesars’ estate were down 7.5 per cent in the quarter with Chairman Gary Loveman suggesting nongaming revenues might soon overtake Gaming Revenue.

“Food and beverage revenues were up very meaningfully in a year when gaming revenues were weak, and we do think that trend is with us for a long time to come,” he explained. “We have visitors that are coming to Las Vegas principally for nongaming activities, though they may gamble a little while they’re here.”

The Las Vegas-based operating giant, who has failed to record a positive quarter since going public in February 2012, lost US$ 212.2min the quarter that ending June 30, compared to a loss of US$ 241.7m for the corresponding quarter a year earlier.

In Las Vegas, where Caesars said net revenues dropped 4.5 per cent to US$ 745.9m in the quarter, the hope is that an investment of US$ 550 m into the Linq development, the renovation of the Quad and the renovation-related closure of Bill’s Gamblin’ Hall will all help boost revenues in coming quarters. Caesars’ four Atlantic City hotel-casinos and a Philadelphia racetrack casino saw revenues slide by 8.3 per cent. “While challenging conditions in the gaming industry impacted our gaming revenues during the second quarter, we are beginning to observe positive underlying trends resulting directly from the investments we’ve made to enhance our hospitality footprint, particularly in Las Vegas,” Mr Loveman said. “Our performance also reflects our focus on managing operating expenses without sacrificing service.”

Caesars said it had made significant progress in the development of its Las Vegas hospitality corridor, including The LINQ and High Roller. Mr. Loveman explained that the non-gaming elements at Linq aimed to attract younger Las Vegas visitors. “I’m trying to pull customers out of our competitors’ casinos. Linq is a sound investment in a favourable location with a very unique offering,” he said.

The gaming floor at the Quad, previously known as the Imperial Place, is now 40 per cent complete whilst the $180m Gansevoort Las Vegas, being built at Bill’s, is expected to open in the second quarter next year.

“We reached a number of key milestones against our strategic initiatives in recent months, including breaking ground on Horseshoe Baltimore; setting a new attendance record at the World Series of Poker; beginning construction on our meetings facility in Atlantic City; and executing on our hospitality investments in Las Vegas,” Mr. Loveman added. “We are also making progress on our strategic transaction to form Caesars Acquisition Company and Caesars Growth Partners and have proactively improved our liquidity profile and balance sheet. We are excited about our prospects in 2014 and beyond, particularly in light of the improving economic conditions and consumer sentiment, favourable underlying business trends and projects that are scheduled to come online.”

John Kempf an Analyst at RBC Capital Markets commented: “Overall second quarter results were slightly weaker than our expectations and missed the consensus estimate by more. Las Vegas, Atlantic City and Lousiana-Mississippi led the declines and were the primary reason for the variance to our numbers.”