LAS VEGAS (KLAS) — Business is so good in Las Vegas that Caesars Entertainment CEO Tom Reeg can’t find the words.
In a call with investors to talk about second-quarter earnings, Reeg gushed about his Las Vegas management team, high hotel occupancy and returning customer bases — gamblers 55 and older, and even some international travelers — as Caesars posted a profitable quarter.
The numbers out of Las Vegas were up 34% up over last year.
“When you’re running 97% at these rates … really, everything is going great in Vegas,” Reeg said.
Caesars reported $978 million in EBITDA (earnings before interest, taxes, depreciation and amortization), with $547 million of that from Las Vegas. The profits in Las Vegas offset continued spending on digital sports betting and digital casino ventures. The strong showing comes on $2.82 billion in second-quarter revenue — $1.14 billion from Caesars’ Las Vegas properties.
And as investor questions came in, Reeg strayed from finances to talk about the future — including the long-awaited debut of Adele’s residency. He didn’t delve into details — in fact, he didn’t even say her name — but he said Caesars was looking forward to “entertainment coming online in the fourth quarter.” Adele’s residency is scheduled to start Nov. 18.
What does Adele mean to the Caesars bottom line and everyone concerned?
The revenue goes to her, with “a little profit to us,” he said. “And a better customer on the floor.”
He also fielded a question about the impact of recent flooding — a familiar sight, with floodwaters rushing under The LINQ.
“I just took my life jacket off,” Reeg joked. “There’s no impact to the business at all. It’s just some good social media footage.”
Caesars is starting to see investments pay off, and managers are optimistic as consumer trends “remain healthy,” even in the face of a possible recession. The Caesars Forum conference center is helping fill midweek hotel rooms, and 13% of room nights during the quarter were convention bookings, according to Caesars President and COO Anthony Carano.
At Caesars Palace, the project to rebuild the front entrance is expected to be complete in September.
Reeg briefly touched on questions about the possible sale of a Caesars property on the Strip — long rumored to be Planet Hollywood — and said Caesars feels no pressure to move on a sale if the price isn’t right. Investors asked if the cost of financing the sale had presented a problem for prospective buyers, but Reeg provided no additional insight.
Reeg spent a lot of time on the call explaining how Caesars was dropping back on advertising its digital sports betting products after saturating the market last year. He said the company had done a good job of capturing a segment of the market and it was ready to drop back in marketing as the football season arrives. Reeg said he expects the digital business to be profitable by the fourth quarter of next year.
Slashing almost a half-billion dollars of marketing is a “dramatic pivot,” Reeg said, but “We’re really not one to lose money when we don’t need to.”