Caesars Entertainment CEO Tom Reeg said a drop in Las Vegas visitation contributed to its third-quarter earnings decline, but the Strip is clawing its way back in the fourth quarter.
During an earnings call Tuesday with Wall Street analysts, Caesars posted what COO Anthony Carano called “solid results” in the face of a soft Las Vegas market.
“We’re seeing sequential improvements in operating trends in Las Vegas as we enter the fourth quarter,” Carano said.
During the third quarter, Las Vegas had 92% occupancy versus 97% a year ago and average daily room rates fell 5% as a result of weakness in visitation, Carano said.
September delivered the strongest results of the quarter. The group room-night mix was 13% and the segment is on track to deliver a record EBITDA year in 2025 due to strong fourth-quarter bookings.”
Reeg warned analysts on the second-quarter call about a soft summer for Las Vegas. Average daily rates were down more than 6% and occupancy down about five percentage points.
“That’s 90,000 room nights for us and that flows all through the non-gaming piece of the business,” Reeg said. “On the gaming side, slot handle was down only 2%, even though we had 90,000 less room nights. Hold was down almost 600 basis points in the quarter in Vegas and a year-over-year basis impacted us a little over $30 million (and the lowest hold percentage was the lowest in more than three years). And there was a little over $10 million of one-time items that benefited last year, but didn’t repeat – the largest of those being a cancellation of the sponsorship contract on the Planet Hollywood Theater in Vegas.”
Reeg said the quarter got better throughout; July was the worst month of the three. Recovery is expected in the fourth quarter, which they’re seeing already. Cash room revenue is down slightly year-over-year compared to 11% in the third quarter.
“That’s a considerable improvement and a lot of that is the group calendar,” Reeg said. “Some Caesars-specific groups benefit us. FI is looking considerably better than it did last year, but not as good as year one. The headwind for the remainder of the year is New Year’s Eve in the middle of the week, which isn’t helpful calendar wise, but other than that, we see Vegas coming back strongly.”
Group business should set a record in 2026, led by the first-quarter showing, Reeg said. “The return of group business in the fourth and first quarters allows rate compression and brings us back to a much healthier market.”
Reeg said they price items in Las Vegas on a daily basis and constantly adjust them. He admits that in some areas, Caesars and other operators “might have gotten in over the skis pricing wise.” But he added their occupancy was more than 90% in the quarter, while those stories were out there.
“On the days you read those stories, you could have gotten a room for $29, plus a resort fee, on the Strip,” Reeg said. “What’s great about Vegas is there’s something for everybody. You can see Paul McCarney and pay $500 a ticket on the same weekend you can see Donny Osmond for $60.”
Reeg said they’re glad to see the rebound in the fourth quarter and it doesn’t take much to return revenue to where it was in the past.
“We’re talking about a quarter where we did about $400 million of adjusted EBITDA,” Reeg said. “That quarter pre-merger was $300 million to $320 million of EBITDA, so this is still a very strong market. When you’re pricing thousands of things on a daily basis, as we and our peers are, it’s easy to find things and say look how much this bottle of water costs. The value proposition in Vegas stacks up to just about anywhere you could want to travel. It won’t be long before we’re talking about the story of the $25 bottle of water.”
Capital investments at the Flamingo Las Vegas, with a new pool experience and other amenities, have exceeded return expectations, Carano said. Caesars has plans for a day club at Caesars Palace, a rebrand of the Cromwell, and a Luke Combs honky tonk project at the Flamingo.
Regional revenues were up, driven by strong returns in Virginia and New Orleans and continued reinvestment in the Caesars database, Carano said. EBITDA grew 4% on a hold-normalized basis in the quarter. There was 6% net revenue growth.
“Early results from our customer reinvestment are promising, driven by strong rated play in the quarter,” Carano said. “We continue to refine our marketing approach, as we remain focused on delivering strong returns on these investments.”
Reeg said they focused on marketing for properties impacted competitively. They will refine that and take out what’s not working and expand what is to other markets. Demand for regional properties continues to be solid, he added.
