Caesars’ earnings less than expected
By Hannah Dreier, AP
LAS VEGAS — Casino operator Caesars Entertainment Corp. posted a smaller loss for its fiscal second quarter on Monday, but results still missed expectations, as slots and tables drew fewer gamblers.
Caesars runs more than 50 casinos, most of them in the U.S. and Britain. This includes Harrah’s Lake Tahoe and Harveys in Stateline.
The company saw casino revenue decline by $116.8 million, or 7.5 percent. CEO Gary Loveman said food and beverage sales may ultimately replace those dollars.
“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 said during a conference call with analysts and investors. “We have visitors that are coming to Las Vegas principally for nongaming activities, though they may gamble a little while they’re here.”
Food and beverage revenue was essentially flat overall for the quarter, but rose 8.9 percent in Las Vegas, where gambling revenue was down 15.5 percent.
Caesars attributed the drop in gambling income to fewer patrons. The company also pointed to increased competition in regional markets, as states open the door to commercial gambling, and the elimination of some less profitable marketing strategies.
Loveman, a former Harvard professor, has made a name for himself with innovative loyalty programs that encourage customers to keep coming back. But casino patrons, especially younger ones, are increasingly turning away from gambling, and Las Vegas moguls are attempting to make up the difference with lavish nightclubs, decadent restaurants and boutique hotels.
Caesars said that its net loss for the three months ended June 30 shrank 12 percent, to $212.2 million, or $1.69 per share, from $241.7 million, or $1.93 a share, last year. Revenue edged down to $2.16 billion, from $2.16 billion in the 2012 second quarter.
Analysts had expected a smaller loss of $1.40 per share on higher revenue of $2.18 billion, according to FactSet.
Caesars is the largest operator of casinos in the U.S.
Of their entire portfolio, no properties are as unique as those at Stateline. And yet, they invest little to no money into these gems. In a way, it’s very sad, but how do you have conformity with so many different venues?
The only way the Lake Tahoe investments for Harrah’s will work will be to bring in special events, new dining, and create a unique upscale lodging experience. But investing little to nothing in these properties is a travesty.
The world has changed around the gaming industry, yet the gaming industry in Nevada has been slow to meet those changes.
Unfortunately for customers, gone are the days when Food and Beverage were used as loss leaders to lure patrons into casinos. One can remember the long lines for the all-you-could- eat prime rib dinner buffet, snaking purposely past endless rows of slot machines at Sahara Tahoe years ago. Now that F & B are stand-alone revenue centers mandated to return maximum profit on their own, the value of a casino to many consumers has regretfully diminished, as evidenced in Loveman’s observation of fewer patrons.
The line at Harvey’s while waiting for the El Dorado room buffet ran past many slots. Sometimes we had to go back and get our friends away from the machines once we reached the front of the line.
But Steve is correct that the lines were so long because the price was there to attract people to come to the casino.
Same thing with the shows at Harrah’s , they used to send out postcards to customers which were good for free midnight shows Sunday through Thursday nights. We’d take off Friday and drive up after work Thursday to see the show that night and then spend the next 3 days.
hopefully they have to sell the Tahoe properties they are squandering. things just haven’t been the same since Harrahs turned Harveys into its redheaded stepchild
How many consecutive Q’s of losses can a company withstand before it has to declare bankruptcy? Especially when the source of the losses is declining revenue? (And how does all of Caesars top mgt. keep its jobs when the company is failing so spectacularly?!)
Hope the good people I know who’ve worked for that company are able to ensure that their pensions are secure!
They have followed the corporate model doing all the wrong things for the wrong reasons while ensuring that they have no buy-in from employees. Increased debt to pay exorbitant salaries while reducing employee competence at every turn. And, guess what, the product has failed…