Caesars shows signs of recovery in Q3
After emerging from bankruptcy protection in early October, Las Vegas-based Caesars Entertainment saw a 10.4% improvement in Q3 gaming revenue at its flagship Caesars Palace to help offset a third-quarter loss.
The company chalked up a $468 million loss on revenue of $986 million for the quarter ending Sept 30, or a loss of $3.14 per share. A year earlier, Caesars showed a $643 loss on revenues of $986 million or a drop of $4.38 per share.
The gaming revenue boost comes at a welcome time for the casino entertainment industry icon, after years of stalled bankruptcy proceedings were resolved last month leaving the company with a restructuring plan that included $2 billion of cash set aside to improve existing properties including the renovation of 6,000 hotel rooms, of which 4,500 are in Las Vegas, develop land near The Linq Hotel, where the company plans to build a conference center, and for possible future mergers and acquisitions.
As a result of the restructuring that allowed the company to exit bankruptcy, Caesars was able to cut its interest obligations by roughly $290 million per year, reduce annual fixed charges by $1.6 billion per year and lower its debt costs to 4.5%.
In its continued drive to move forward after the bankruptcy debacle, Caesars announced that it has hired marketing industry star Chris Holdren as its Chief Marketing Officer. Holdren previously served with the likes of Starwood Hotels & Resorts Worldwide, The Walt Disney Company and Handy, a high-tech start-up. At the same time, Caesars informed investors that it is braced for a loss in Q4 in light of an increase in cancellations after the recent Las Vegas mass shooting, and a decline in play by Asian gamblers, who seem to be feeling more comfortable heading back to Macau after the Chinese Communist Party showed signs of easing its hard line on whales visiting the Asian gambling mecca.
Wynn unveils new epic vision for Las Vegas Strip hotel
In a meeting with investors and analysts last week, the ever-flamboyant Steve Wynn put on quite a show at the Encore Theatre at Wynn Las Vegas, releasing detailed plans for his ambitious Paradise Park Project to an audience expecting a quarterly earnings call.
By passing investors’ expectations of detailed financials, Wynn boasted that the numbers speak for themselves, pointing out that the Wynn Las Vegas has had the best Q3 in its history. He then proceeded to devote a few minutes to talking about the devastation inflicted upon Macau by Typhoon Hato, before breaking into the real show stopper.
With the all enthusiasm he reserves for unveiling his grandest ideas, Wynn then revealed detailed plans for a new 47-storey hotel tower on the Las Vegas Strip with relish. Referred to as the Wynn Resorts Paradise Park, Wynn said work on the 1,500-room hotel would begin as early as January 3.
The hotel is expected to have an over the top carnival theme, with a nightly parade of floats on an hour glass shaped lagoon along a mile-long boardwalk as fireworks go off. Atop the nightly spectacle, Wynn said regular attractions would include a horse pulled, 103-foot diameter carousel that hangs over the water, a bumper car like ride in which colliding cars will throw out bursts of LED light and audio explosions, and plenty of ziplines along the 1,600-foot long, 650 to 700-foot wide lagoon.
“There will be 10-12 floats in an audio-visual parade every night right after dark,” Wynn said. “That parade is a musical and visual extravaganza, but it’s not the Rose Bowl parade. It’s a much edgier kind of thing with huge spiders with spider webs, and King Kong and the devil and these things are 25 to 30 feet tall and they’re animated,” Wynn said as reported the Las Vegas Review-Journal.
Wynn also went on to explain his ideas to monetize the parade, “What’s wonderful is that 10 or 12 people can pay and be part of that parade and get on the floats,” he said. “They’re self-motivated floats, and they can drive down the ramp on wheels and can work through the water with their propulsion systems.”
Needless to say, the crowd of investors and analysts looking for a dose of detailed numbers from the Chairman and CEO ended up walking away instead with a full shot of Wynn style Las Vegas extravagance.
Las Vegas hotel rooms being renovated en masse
While new property development on the Las Vegas Strip may be limited, renovation is booming. The Las Vegas Review-Journal reported that at least eight major strip properties are undergoing major renovation to the tune of approximately half a billion dollars.
There are some 86,000 hotel rooms on the Las Vegas Strip, and, over the course of 2017 alone, some 9,000 of these rooms are being refurbished, that’s a rate of nearly 25 per day.
The most significant renovations include:
Caesars Entertainment Corp, which is investing some $350 million to redo 4,500 rooms at the Flamingo, Bally’s, Planet Hollywood and Caesars Palace, is the prime mover, already having completed the renovation of 1,181 rooms to the tune of $100 million at the Palace Tower. The investments are part of the company’s emergence from years of bankruptcy turmoil and part of the restructuring plan agreed upon with its creditors and the bankruptcy court.
Not far behind in the new rush to renovate, and in hopes of attracting ever greater numbers of upscale guests, The Cosmopolitan has kicked down $150 million to redo some 2,800 rooms.
The Palazzo has also hopped on the bandwagon, laying out over $100 million to renovate 2,876 rooms. The renovations are expected to be finished by January and come on the back of a slight but steady rise in Las Vegas room occupancy (before the October mass shooting saw a substantial, albeit temporary, drop).
Hotel room occupancy on the strip averaged approximately 92% through the end of summer with the daily room rate seeing a 4.3% increase to an average $127 for the first eight months of 2017.