CASINO NEWS: CAESARS PLANS NEW LAS VEGAS DEVELOPMENT
Caesars Entertainment Corp. Chief Executive Officer Mark Frissora wants to develop more than 90 acres the company owns in Las Vegas, including land right in front of Caesars Palace after its largest unit emerges from bankruptcy later this year.
“We have a lot of real estate that’s underutilised,” Frissora said. “We have plans to basically develop all of that very valuable centre-strip property as soon as we emerge. Those assets will have a very high-return, low-risk profile.”
Caesars, the largest owner of casinos in the U.S., has struggled under a mountain of debt since a $30 billion leveraged buyout in 2008. In January of 2015, the company put its largest division, Caesars Entertainment Operating Co., into bankruptcy. It’s expected to exit in the third quarter this year.
The Las Vegas-based company has enjoyed growth in sales and profit over the past two years, due in part to a strategy of renovating hotel rooms and searching for cost savings in places ranging from parking lots to guest check-in.
As part of the bankruptcy restructuring, Caesars is creating a real estate investment trust that will own many of the company’s casinos, including the flagship Caesars Palace in Las Vegas.
Caesars has reduced promotional costs, like the amount of free casino chips it gives customers while maintaining its market share in key cities. According to CFO Eric Hession, the company has cut $800 million in annual expenses over the past two years.
With its balance sheet repaired, Caesars is looking at new markets for expansion, including Japan, South Korea, Canada and Brazil. The company wants to hire more people in mergers and acquisitions and in casino development.
Hotel revenue has been a source of growth with average room rates in Las Vegas have risen 50 percent in the past 5 years. About 56 percent of the company’s Las Vegas rooms will be remodelled by the end of the year, and all the company’s Las Vegas hotels will be charging for parking by the end of June.
Almost one-third of the company’s guests in Las Vegas now use self-service kiosks to check-in to the hotels, technology that frees up hotel staff. The land Frissora wants to develop includes 50 acres behind the Bally’s resort, almost 40 acres behind the Linq and seven acres in front of Caesars Palace.
Competitors including MGM Resorts International and Wynn Resorts Ltd. have also been remodelling their properties and adding pedestrian-friendly features that emphasise shopping, entertainment and dining more than gambling.
Source: Bloombergs
