Casino-entertainment giant Caesars has posted a net revenue increase of 23.5% for the first quarter of the year, amounting to $2.8 billion, with results driven by growth in Las Vegas and the firm’s digital business. During the three-month period, the company also managed to cut its net loss by 80%, amounting to a $136 million loss.
In conversation with investors, officials for Caesars showed their support for the Oakland Athletics’ potential plans for a Las Vegas ballpark. Similarly to MGM Resorts, Caesars believes that the prospect of the A’s in the gambling mecca is exciting. However, CEO Tom Reeg said Tuesday that he didn’t want to see tax hits that would “unnecessarily” impact Clark County or taxes that could affect customers.
During the company’s earnings call, Reeg also noted customer demand was still high in Las Vegas, as the segment reported a net income of $293 million, up 74.4% year-over-year, and revenue of $1.11 billion, a 23.7% jump. Group and convention-related hotel demand was 21% for the quarter, up from 14% the same quarter last year; and hotel occupancy reached 95%, signaling continued strength in the Las Vegas market despite looming economic concerns.
CEO Tom Reeg
“What you’re seeing through Vegas is not only just extraordinary demand that continues,” Reeg said, as reported by Las Vegas Review-Journal. “(But) as we look through each month, you’re seeing the average customer in our property continuing to (rise). We’re getting group business that is higher dollar, comes with banquet business attached and replaces our least profitable players.”
Q1 highlights
Reeg described the quarter as “strong,” led by a new Q1 Adjusted EBITDA record in Las Vegas. Meanwhile, results in the regional segment remained consistent with prior quarters, especially when excluding the impact of bad weather in northern Nevada during the three-month period. Moreover, the firm’s digital segment was nearly break even in the quarter despite launching operations in Ohio and Massachusetts.
As for other results, Same-store Adjusted EBITDA reached $958 million, up from $296 million for the comparable prior-year period; and Same-store Adjusted EBITDA, excluding the Caesars Digital segment, was $962 million versus $850 million in Q1 2022. Revenue was higher across all segments for the three months to March 31.
Casino revenue for the quarter climbed 22.7% to $1.56 billion, while food and beverage revenue jumped 26% to $427 million. Meanwhile, hotel revenue was up by 31.3% to $503 million, and other revenue increased by 13.3% to $315 million.
As of March 31, Caesars had $13.2 billion in aggregate principal amount of debt outstanding. Total cash and cash equivalents were $965 million, excluding restricted cash of $258 million. “We continue to target a third consecutive year of $1 billion of permanent debt reduction. We ended the quarter with total net leverage as calculated under our bank credit facility of 4.2x as of March 31,” said Bret Yunker, Chief Financial Officer.
Caesars takes steps forward
Officials also noted a commitment to “up-tiering,” illustrated by recently announced changes at Horseshoe Las Vegas and Paris Las Vegas. On Monday, the operator revealed it will be spending more than $100 million to transform Horseshoe’s Jubilee Tower into a “premium” hotel tower that connects to Paris, with large rooms and balconies facing the Strip.
Rendering for the project
Executives said Paris’ room rate and average non-gaming spend per room is “significantly ahead” of Horseshoe, meaning the company could earn more from the tower once it integrates with Paris, reports Review-Journal. “What we can do here is a simple upgrade in terms of the rate that those rooms will get,” Reeg said. “And then create, on that side facing the Strip, some of our most attractive non-villa products in the market.”
As for the digital side, the Nevada-based firm said it plans to release a standalone online casino app this year. The application will see a launch in the third quarter, and will have increased game content, new proprietary offerings and real-time marketing capabilities. Officials said it would be separate from its Caesars Sportsbook app in an effort to attract the core slot-playing customer.
See Caesars’ full Q1 financial report here.
Original article: https://www.yogonet.com/international/news/2023/05/03/67012-caesars-posts-235-revenue-jump-in-q1-driven-by-strong-vegas-performance-digital-segment-improvement
