Like many Americans, Caesars Entertainment Corp. CEO Gary Loveman is watching the fluctuations in the stock market – and he’s wondering how they’ll affect visitation and spending at Caesars’ hotels and casinos around the country.
So far, Loveman said Tuesday, it’s "steady as she goes."
"We’ve not seen any degradation in the forward-looking indicators. Since the world got complicated early last week, we began to put our antenna upward significantly sharply.
"So far everything has been steady as she goes," Loveman said during a conference call with securities analysts discussing his company’s second quarter financial results.
"I’m not anticipating a pullback in group bookings. I think it’s certainly possible that if the market fell off or it continued to be this severe over a period of time measured in weeks, you can anticipate some weakness in the play of our higher-end guests.
"They’d be perhaps more cautious than they might have otherwise been. But there’s a lot of speculation about that, we’ll have to wait and see how this will evolve," he said.
Similarly, MGM Resorts International CEO Jim Murren said Monday that his company had so far not seen any change in customer behavior in reaction to declines on Wall Street associated with political fighting over federal spending and taxation; and with the Standard & Poor’s downgrade of the U.S. debt rating.
For Caesars, the company posted a loss on Tuesday – but this was the third consecutive quarter of revenue increases on a same-store basis on the Las Vegas Strip as business continued to pick up in the U.S. gaming capital.
Thanks to cost cutting, the company narrowed its quarterly loss from $274 million in 2010’s second quarter to $155.5 million in the 2011 second quarter.
“In 2008, we began implementing a series of structural and operational refinements designed to streamline our operating structure, strengthen our balance sheet, enhance our marketing effectiveness and improve our ability to act on growth opportunities,” Loveman said in a statement. “Those activities accelerated as the recession deepened, resulting in substantial cost savings, greater financial flexibility and capital-efficient, high-return investments. The changes we’ve made, coupled with improved spend-per-trip fundamentals and overall improvements in Las Vegas, were largely responsible for our best quarterly gains in three years. We are continuing to implement programmatic initiatives to improve our efficiency and flexibility, which should serve us well when the economy improves."
Caesars said quarterly net revenue increased slightly from $2.22 billion to $2.229 billion.
In Las Vegas, net revenue for the quarter increased 10.3 percent from the year-ago quarter to $786.4 million. This was the first quarter in which the full-quarter results of Planet Hollywood, acquired in February 2010, were included in the year-to-year comparisons.
EBITDA, a key profitability measure, jumped nearly 32 percent in Las Vegas to $233.1 million.
EBITDA means earnings before interest, taxes, depreciation and amortization.
With big properties on the Las Vegas Strip such as Caesars Palace and Flamingo Las Vegas, the company attributed the Las Vegas improvements to customers spending more at casinos and on hotel rooms as visitation levels were relatively flat compared to 2010’s second quarter.
Further improvements are hoped for in Las Vegas as Caesars completes work on 662 rooms in the Octavius Tower at Caesars Palace, which are expected to open by New Year’s Eve. Also in Las Vegas, planning continues for the $500 million LINQ retail, dining and entertainment experience.
Elsewhere in Nevada outside of Las Vegas, the results weren’t so promising for Caesars.
The company’s properties in Laughlin, Reno and Lake Tahoe contributed $108.6 million in quarterly revenue, down 2 percent from the year-ago quarter, as guest visits and spending both declined.