Caesars CEO expresses optimism for Las Vegas, sees a return of group business

February 26, 2021 12:53 PM
  • Howard Stutz, CDC Gaming Reports
February 26, 2021 12:53 PM
  • Howard Stutz, CDC Gaming Reports

Caesars Entertainment CEO Tom Reeg told the investment community to rip up predictions that it would be 2023 before the Las Vegas Strip returns to its pre-COVID-19 pandemic gaming numbers.

“I think there will be a dramatic pull forward of expectations,” Reeg said during Caesars fourth-quarter earnings conference call Thursday.

He said the number of hotel room bookings increased dramatically in late January and early February, saying it was “almost like a light switch was flipped.” Nine of the company’s top 10 room booking days took place in February. It was the most activity the company had seen since Nevada casinos reopened in June following the state’s 78-day gaming shutdown.

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Tom Reeg, Caesars CEO

Reeg is optimistic the Caesars properties could be hosting group business as early as the second half of 2021.

The upbeat projections came on the same day that state gaming regulators said Las Vegas Strip casinos saw a 43.8% gaming revenue decline in January.

Truist Securities gaming analyst Barry Jones noted the “encouraging” data points that have occurred so far in the first quarter, including 32% more group room nights are currently booked versus the second half of 2019, which equates to $200 million in room revenue.

Some of the bookings are attributed to the Caesars Forum Conference, which was supposed to open last year.

“Management highlighted encouraging trends so far this year that could point to a strong recovery,” Jonas told investors. “We think the key investor focus is the positive vaccine-related outlook for the second half of 2021 and beyond, along with Caesars’ emerging interactive strategy.”

Reeg said the pace of Caesars’ room bookings was almost double what the company saw at the end of 2020. The company has “a lot of wood to chop in Las Vegas as it reopens.”

As far as selling one of the company’s eight Strip resorts, that now looks to be an event that would happen in early 2022. Reeg nixed any talk that Planet Hollywood on the Strip was about to be sold.

“If anyone knows what we’re being paid (for the property), can you let me know,” Reeg remarked in attempting to squash any Planet Hollywood rumors.

He did say Caesars would have an interest if New York or Texas opens their states to commercial casino development.

“We would certainly take a hard look at whether it makes sense for us to play there,” Reeg said, adding the company had no interest in buying a property in current regional markets.

In July, Caesars and Eldorado completed their $17.3 billion merger, with Eldorado’s management team, led by Reeg, taking control of the operation and keeping the Caesars name and stock symbol.

The company had had more than 50 gaming properties in 16 states but sold several casinos around the country in order to avoid any federal antitrust issues. Caesars is still waiting to close the separate sales of two Indiana casinos.

In a year skewed by pandemic-related casino closures and operating capacities reduced in markets by as much as 75%, Caesars – combined with the Eldorado properties and results of casinos sold or pending sale – reported net revenues of $3.5 billion, a 37.4% increase.

The company lost $1.8 billion in 2020 compared to a net income of $81 million in 2019.

In the fourth quarter, Caesars reported net revenues of $1.5 billion and a net loss of $555 million.

Caesars is in the process of acquiring British sports betting giant William Hill for $3.7 billion. The deal, which cleared federal antitrust concerns in December and was given a favorable vote by William Hill shareholders in November, has received approval from several state gaming authorities. The transaction is up for preliminary approval in Nevada next week and Indiana before the end of March. The also one last court hearing in London.

Reeg expects the deal in the second quarter and the William Hill sports betting app would be integrated with the Caesars Rewards loyalty program by the start of football season next fall.

Caesars already owns 20% of William Hill US, the British company’s American subsidiary through a previous deal. Reeg told analysts he expected the Caesars-William Hill venture to be operational in 20 U.S. states by the end of 2021.

William Hill US operates 12 branded sportsbooks at Caesars’ properties in Nevada, Iowa, and New Jersey. William Hill will rebrand additional Caesars sports betting facilities and launch the Caesars Sports Book by William Hill mobile app in Indiana, Pennsylvania, New Jersey, and Nevada.

Last month, Caesars said it acquired a minority strategic investment in the daily fantasy sports platform SuperDraft. A price wasn’t revealed, but Caesars has an option to increase its stake over time up to 100% at pre-determined levels.

Caesars ended the year with $15 billion in long-term debt. The company had total cash on the books of $1.8 billion. The company also had unrestricted cash of $2 billion. Chief Financial Officer Brent Yunker said in a statement the company’s $1.9 billion equity deal last September, “positions us well for the expected William Hill closing early in the second quarter of 2021.”

On the international front, Reeg said the company would renew the management contract for Caesars Windsor in Ontario, Canada, but the casino “will be the extent of our non-U.S. business.”

He said the company sold its interest in South Korea’s integrated resort project on Yeonjong Island to its partner.

Shares of Caesars closed at $85.14 on the Nasdaq Thursday, down $4.67, or 5.20%.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.