As Caesars Entertainment prepares to put its financial woes behind it later this year, the casino giant is betting on the Las Vegas Strip for its future growth.
Caesars just completed in May its renovation of 2,496 rooms at Planet Hollywood and 1,100 rooms at its Palace Tower in Caesars Palace. The renovation at Paris Las Vegas was completed in the first quarter. It recently announced $90 million for remodeling rooms at Flamingo Las Vegas starting in August. The first rooms will be ready by October and the entire renovation project will be completed by the second quarter of 2018.
Hotel room renovations began in Las Vegas in 2014, and more than 55 percent of the renovations will be completed by 2017. More than 90 percent of rooms in the company’s Las Vegas properties will have been renovated by end of 2020.
That’s just the start. Caesars has more than 90 acres along the Strip that it plans to develop, although the details have yet to be finalized. That includes 7 acres in front of Caesars Palace, 39 acres behind LINQ Hotel and the Flamingo. There’s another 50 acres behind Bally’s Las Vegas and Paris Las Vegas prime for development.
Two-thirds of Caesars’ pre-tax income and 43 percent of its revenue comes from the Strip, according to Richard Broome, executive vice president of corporate communications.
Las Vegas is poised to grow with existing development, planned doubling of the Las Vegas Convention Center and events at T-Mobile Arena where a NHL franchise will begin play in the fall. The Oakland Raiders will relocate to Las Vegas in 2020 when its new stadium will be completed, he said.
“We’re very bullish on Las Vegas,” Broome said. “We think Las Vegas is poised for its next transformation, and we’re excited to be part of that.”
There’s a lot of good happening in Las Vegas with reports showing it as an affordable place to live and take a vacation, Broome said. It’s even become more of an attraction and destinations for millennials to vacation and live, he said.
“We think there’s great days ahead for Las Vegas in terms of growth,” Broome said. “A rising tide raises all ships, and a big expansion of the convention center and NFL team coming here puts Las Vegas on the map in ways it hasn’t been in the past. We believe we’ve made amazing growth and progress over the past 20 years, and we’re optimistic that will accelerate in the coming year.”
Jackie Beato, Caesar’s senior vice president of finance, said no decision will be made on development on the vacant land until a new board of directors is put in place and it evaluates options. One possibility for land behind Flamingo on the east side of the Strip is the construction of convention space, she said.
“We’re now actually emerging from bankruptcy and financial conditions are improving significantly,” Beato said. “We think it will be an opportunity to re-enter the landscape and talk about where we can add considerable value.”
When Caesars emerges from bankruptcy, it will look at opportunities in new jurisdictions and with branding, licensing and acquisitions, Beato said.
Caesars has a joint venture casino project underway in Korea. It has submitted an application for a license in Toronto. It’s also monitoring the legislative and regulatory process in Brazil and Japan to seek out opportunities there, Broome said.
Caesars has invested $2 billion since 2014 in refurbishing rooms, and that’s one of the reasons operating revenues improved in 2015 and 2016, Broome said. It has struggled with debt since a $30 billion leveraged buyout in 2008.
Beato said the refurbishment of rooms has increased margins because the incremental rates have added between $25 and $40 a night. The average room rate has gone from $92 in 2012 to $140, officials she said.
Caesars is in the process of implementing fees for parking at many of its properties to generate more revenue, she said.
Caesars officials said its implementation of check-in kiosks more than a year ago has been a success with 30 percent of customers opting to use them rather than go through a front desk clerk. It has helped manage the overflow, Broome said.
Beato said the kiosk check-ins also help the resort learn more about customers and refine offers made to them.
Caesars is introducing skilled-based games and experimenting with gaming environments to make them work in the casinos, Broome said.
Keeping gaming upgraded and fresh and harnessing technology will be important going forward, Broome said. There will be more technology employed to engage customers whenever they’re on the property, he said.
That means people on the casino floor getting rewarded on their rewards card when people win jackpots and notifications on apps of open tables and drink specials as well, Broome said.
“We’re using technology to benefit customers and create a greater sense of community when on the property,” Broome said.