Caesars Entertainment sees growing profits as a good bet as hotel rooms filling up

Local News

LAS VEGAS (KLAS) — Customers are coming back to casinos, and Caesars Entertainment is in an enviable position — the biggest casino company in the nation.

Caesars Entertainment CEO Tom Reeg pointed to growing profits and new opportunities as the company reported its third-quarter earnings, and sees customers who are beyond ready to get back to pleasures they put on pause during the COVID-19 pandemic.

“If you’re betting against the American people’s propensity to gamble … that’s been a losing bet since the dawn of civilization,” Reeg said during an earnings call on Thursday.

The return of customers in Las Vegas is growing steadily since July, producing profits for the company that grew from $10 million in July to expectations above $50 million in October.

Hotel occupancy at Caesars Las Vegas properties is in the mid- to high-90 percent range on weekends, and above the 50 percent mark on weekdays. It’s so busy that Caesars Palace began charging for parking again — a move they made so their own customers could find a spot on what officials call “the 50-yard line” on the Las Vegas Strip.

Caesars Entertainment has no plans to close properties mid-week, either.

Shows recently returned to some Caesars properties — although not on the scale of residencies or big production shows. Reeg said he is thrilled that entertainment has returned, giving tourists another reason to come back, even if it’s not a big money maker right now.

Reeg is especially excited to see $60 million in profits from Las Vegas properties, where all Caesars resorts except the Rio have reopened.

Companywide, Reeg said the company’s EBITDA — earnings before interest, taxes, depreciation, and amortization — show the success in Caesars strategies to cut costs and run on higher margins. Caesars reports “same-store Adjusted EBITDA” of $463 million versus $810 million for the third quarter in 2019.

Many comparisons to previous earnings will be difficult to make in the year after Eldorado Resorts bought Caesars Entertainment. The sale closed on July 20.

MGM Resorts and Red Rock Resorts both reported record high profit margins in their earnings calls this quarter.

Caesars is reporting a margin around 33 percent, and expects to continue operating in the mid- to high-30 percent range, if not the 40 percent range.

Reeg said Caesars has come out of the Eldorado purchase of Caesars Entertainment as a company with much closer attention to efficiency. That’s where the company sees opportunity. “It’s eye-opening for the operators,” Reeg said.

But the company hasn’t been content to scrimp and save its way to profitability.

The third quarter also brought the $3.7 billion Caesars purchase of William Hill, the UK-based sports betting giant.

Also, Caesars is encouraged by progress toward the return of convention business in 2021. Reeg said Caesars currently has 172 events booked, bringing $1.6 million in room revenue. He said 70 percent of the business is new to Las Vegas.

“None of that matters if the public health situation doesn’t improve,” Reeg said. But Caesars officials are “heartened” that Nevada Gov. Steve Sisolak has talked about capacity adjustments early next year.

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