Caesars Entertainment CEO Tom Reeg said the Las Vegas Grand Prix served as a boon to high-end resorts on the Strip, but called for more affordable tickets and more inclusion to benefit mid-tier properties if the event is going to have staying power. Reeg made his comments Tuesday during a fourth-quarter earnings call with Wall Street analysts.
Reeg said Caesars’s higher-end properties Caesars Palace and Paris Las Vegas benefited the most, though the company’s projection of a 5% boost in adjusted earnings during the quarter came in shy of that. Luxury properties Wynn/Encore, Bellagio, Cosmopolitan, and Venetian/Palazzo were considered the biggest beneficiaries of F1.
“In prior quarters, we talked about F1 being a big stimulator of demand for us and we’ve been talking about a 5% lift in EBITDA in the quarter, but our actual experience was about a 4% lift, pretty close to what we were expecting,” Reeg said. “It was a huge lift for the high-end properties, including Caesars Palace and Paris. For our mass-market properties, it was less so.”
Reeg called it “a phenomenal event for the market, but a gargantuan effort to pull off,” given its first year in Las Vegas. As with anything of that scale, Reeg said you learn from the launch and what to do differently as you move forward.
The race has been criticized by Las Vegas residents for the extensive preparations, such as repaving, paddock construction, and grandstand installation that for months snarled traffic near the Strip. Restaurants and other businesses adjacent to and just east of the Strip complained of millions of dollars in losses and threatened to sue. Many residents couldn’t afford F1 tickets, which at their cheapest were going on StubHub for race day only for $677 and $2,100 on average for a three-day ticket.
“We know at Caesars that this will be a better event when more of the city is energized and not just the four or five buildings that garner most of the benefit,” Reeg said. “We’re working with our partners in the city and with F1 to make sure it’s a more broadly successful event next year than it was this year.”
Reeg was asked by J.P. Morgan analyst Joseph Greff if F1 can be a successful non-high-end event and growth driver at mid-price-point properties. F1 has an agreement to run the race for three years, with renewals in place to make it a 10-year event.
“The key piece is the pricing of the actual event,” Reeg responded. “The lowest-end ticket was pricey by any definition. I expect there’s a more approachable participation that’s going to be helpful for properties that didn’t get to participate as much this year. At Caesars, and in my discussions with MGM (Resorts International) and Wynn (Resorts), we’re all aware that if only a few buildings in the market benefit from this, it’s not going to be a super long-term event.”
Reeg called it a “full sprint” to get the race into position in terms of building the paddock and preparing the course. Now, officials get to review what did and didn’t go well in order to make improvements. Clark County officials will be conducting their own analysis of the race.
“I expect it to be even better in 2024,” Reeg said.
Applied Analysis Principal Jeremy Aguero said the race week before Thanksgiving attracted 145,000 visitors, including about 25,000 who were not in Las Vegas for the race. Visitors spent about $561 million that week, with race-goers spending $4,128 on average, while non-race goers spent $2,662, he said.
The race generated about $64 million in tax revenue.
