Researchers from Standard & Poor’s visited Las Vegas recently. No word on which shows they enjoyed, which restaurants pleased their tastes or if they partook in some gambling activity.
We do know, however, that the rating service’s fundamental outlook for the gaming industry continues to be negative.
Debt-to-cash flow ratios for casino companies has risen to 7.5 times in 2008 compared with 4.5 times in 2002, according to Standard & Poor’s Credit Market Services.
“With cash flows declining, debt-burdened properties need to keep occupancies high and at the same time cut costs to remain in compliance with debt covenants,” according to a report from Standard & Poor’s that was quoted on BusinessWeek.com.
“However, deteriorating service levels could make that difficult, and we expect price discounting to intensify,” the researchers went on to write.