LAS VEGAS (KLAS) — Buffets may never be back at Caesars.
Caesars Entertainment has seen more changes than most as the COVID-19 pandemic wiped out months of business. Coming out the other side of the pandemic, Caesars looks very different.
For one, it is now the largest gaming company in the United States. Reno-based Eldorado Resorts paid $17 billion for Caesars in a blockbuster deal.
The company has reopened everything except three Las Vegas resorts — the Rio, Planet Hollywood and the Cromwell — and 58% of its workforce is back on the job. Rumors of a sale have shadowed Planet Hollywood since the merger, and comments during a second quarter earnings call did nothing to dispel the talk.
And Caesars says it has learned lessons that some of its competitors seem to want to ignore. Some things may never return, because in an uncertain future, resorts cannot afford any part of a business that doesn’t turn a profit.
Buffets and some marketing promotions are weights that Caesars can’t carry anymore.
On the other hand, the combined power of the customer databases of Caesars and Eldorado are a gold mine that the company has begun to tap into with the promise of prosperity with their loyal customers.
The company also reports strong growth in convention bookings for the future — six months and beyond — including a lot of new business.
So while Caesars reports an 80.1% decrease in profits for the second quarter compared to 2019’s second quarter, the picture is much different than previous reports from Caesars. A net loss of $100 million stands in stark comparison to 2019’s profit of $18.9 million.
The merger’s timing made it harder to describe COVID-19’s effect.
Tom Reeg, Chief Executive Officer of Caesars Entertainment, Inc., said, “Our second quarter operating trends were negatively impacted as the majority of our properties remained closed during April and May 2020. Our properties began to reopen in late May and early June. All of the combined new Caesars Entertainment, Inc. regional properties are now reopened and we are encouraged by operating trends.”
The company has an enormous footprint in the US, with 54 properties in places like Atlantic City, Reno and the Midwest. While other companies talk about the fluctuations in their Macau resorts, Caesars has a different flavor these days.
The challenges of COVID-19 are the same, putting holes in the financial reports of everyone these days. But the Caesars take on things is just a little different, just like its place in the market.
The company is still carrying a load of debt — $13-14.7 billion depending on the calculation — but it also had $7 billion in liquidity.
But spending isn’t in the plan right now, and Caesars is especially excited about the prospects of sports betting and iGaming, which it expects to produce more than $600 million by year’s end. Reeg called the growth opportunities the biggest since riverboat casinos hit the Mississippi River in the 1990s.