LAS VEGAS, Nev. – Casino operator Caesars Entertainment Corp. posted a smaller loss for its first quarter on Wednesday, but results still missed expectations as a drop in visitors dragged down revenue.
Caesars owns or manages more than 50 casinos, most of them in the U.S. and Britain. In addition to its Las Vegas and Atlantic City, N.J., resorts, Caesars operates properties in Indiana, Louisiana and several other states. U.S. casinos, however, are struggling with the sluggish economic recovery, and Caesars is the only major U.S. casino company without a presence in the Chinese gambling enclave of Macau. Rival gaming companies Wynn Resorts Ltd. and Las Vegas Sands have both reported gains for the first three months of the year, helped by their lucrative Macau properties.
CEO Gary Loveman emphasized the constellation of factors hampering the U.S. casino industry during a conference call with analysts, and urged caution in making comparisons with 2012.
“Consumer spending has remained tepid and the economic environment continues to impact gaming results,” he said. “I also want to note that the first quarter of 2012, which may seem like a long time ago, was particularly strong, making the year-over-year comparisons difficult.”
Revenue slipped 3 per cent to $2.14 billion from $2.21 billion as slow recovery from Hurricane Sandy continued to hurt the company’s Atlantic City casinos, and customers spent less at its other properties. Caesars’ average daily room rates remained flat, and its occupancy rates decreased by nearly 3 percentage points, driven especially by empty rooms in Atlantic City. Caesars linked the drop in visitors to weak consumer sentiment, particularly among less affluent customers.
Loveman, a former Harvard professor, has made a name for himself with innovative loyalty programs that encourage customers to keep coming back, especially the working-class patrons that Caesars says have been staying away in recent months. He said the company will be rolling out new loyalty programs that offer “a higher degree of intimacy and relevance” to guests.
Caesar’s has been engaged in a flurry of activity on the Las Vegas Strip in an effort to draw new business. It opened the boutique Nobu Hotel within the sprawling Caesars Palace casino this year, is the midst of overhauling Bill’s Gamblin’ Hall & Saloon into the luxury Gansevoort Las Vegas and is building Linq, a new project designed to appeal to Gen Xers.
Loveman also touted Caesars’ planned entry into the burgeoning online gambling market. The nation’s first online poker site launched in Nevada on Tuesday.
Caesars said that losses for the first three months of the year shrank to $217.6 million, or $1.74 per share, from $280 million, or $2.24 a share, a year ago when it booked a big charge for a halted Mississippi project. Analysts had expected a smaller loss of $1.46 per share on higher revenue of $2.18 billion, according to FactSet.
Shares of Caesars Entertainment ended regular trading down 71 cents, or 4.5 per cent, at $15.20. The stock slipped 3 per cent to $14.95 in aftermarket trading following the report. Still, shares have more than doubled since the beginning of this year.
Hannah Dreier can be reached at http://twitter.com/hannahdreier .