August 3, 2017 - 2:49 pm
Add unlucky play to the list of financial struggles Caesars Entertainment is undergoing.
The Las Vegas-based company, operators of nine Las Vegas properties and in the midst of emerging from Chapter 11 bankruptcy protection, reported huge losses — but not as bad as in the second quarter of 2016 — on weak revenue performance.
Caesars Entertainment Operating Co., which includes two subsidiaries, but not Caesars Entertainment Resort Properties, the owner of six casinos, on Thursday reported a loss of $1.4 million, $9.68 a share, on $1 billion revenue. A year earlier, the company had a loss of $2 million, $13.25 a share, on revenue of $992 million for the quarter that ended June 30.
Cash flow remained unchanged at $289 million for the quarter.
“In the second quarter, stronger gaming fundamentals across most of our properties were offset by expected unfavorable year-over-year hold, primarily in baccarat, and the impact of more hotel rooms off the market for renovation,” Mark Frissora, president and CEO, said in a statement accompanying the release of quarterly results.
In a conference call with investors, Chief Financial Officer Eric Hession said the baccarat downturn of $41 million was a result of above-average play in 2016 compared with lower hold in 2017.
Revenue also dipped as a result of Las Vegas hotel rooms being offline during renovation projects. The company reported 1,132 rooms currently being renovated at Caesars Palace, 950 at Harrah’s and 410 at Harrah’s Laughlin. A project that includes 1,270 rooms at Flamingo and 2,068 at Bally’s has been pushed back to a 2018 completion. Companywide, there will be about 6,000 room renovations completed by the end of 2017.
Emerging from bankruptcy
As the company emerges from bankruptcy, slated to be completed by the first week of October, it’s embarking on a strategy to invigorate its loyalty program and investing in infrastructure. In June, the company finalized an agreement between its Total Rewards program and the loyalty program of the Wyndham hotel group.
The company also opened a 48,000-square-foot sound stage, taping the “Who Wants to be a Millionaire?” game show there and conducting an esports competition in June. It also announced plans to build a 300,000-square-foot convention facility near its Linq Promenade.
Caesars also will continue to capitalize on its ability to attract customers with performance headliner residencies and restaurants conceived by celebrity chefs.
Chef Gordon Ramsay is opening his first Hell’s Kitchen restaurant at Caesars Palace and Ramsay and Gina de Laurentiis will open food outlets at the company’s Horseshoe Baltimore property.
Headliner contracts have been nailed down for Jennifer Lopez’s “All I Have” and the Backstreet Boys’ “Larger than Life” shows at the Axis at Planet Hollywood in addition to adding The Who to its stable of performers at the Colosseum at Caesars Palace. It also added “Circus 1903: The Golden Age of Circus” at Paris Las Vegas.
On the gaming side, Caesars signed an esports contract with Microsoft Xbox for tournaments in Atlantic City and Las Vegas and established a partnership with Tencent Holdings Ltd. of Shenzhen, China to spread the World Series of Poker brand through Asia.
Officials said the company’s initiative to charge customers for self-parking has been successful with the company anticipating revenue of $20 million annually. Nevada residents may still park free for the first 24 hours by having their Nevada driver’s licenses scanned at entry and exit gates.
The Caesars bankruptcy plan, approved in January, still has three more regulatory hurdles to clear with Nevada’s Gaming Control Board scheduled to review it next week. Regulators in Louisiana and Missouri must approve the plan.
In Nevada, regulators don’t have to approve the bankruptcy plan, but must license the new entities and controlling executives who will be part of the new Caesars.
Caesars shares closed at $12 a share, down 20 cents or 1.6 percent in afterhours trading after going up 10 cents, 1 percent, to $12.20 at the day’s close on average volume.
Contact Richard N. Velotta at email@example.com or 702-477-3893. Follow @RickVelotta on Twitter.