Dive Brief:
- Caesars Entertainment reported its third-quarter earnings on Tuesday, including revenue and adjusted EBITDA growth. In Q3 2023, the company had $3 billion in revenue, up from $2.9 billion in the prior-year period, and its adjusted EBITDA increased by $30 million year over year, bringing it to an all-time high of $1.04 billion.
- In Las Vegas alone, Caesars saw 4% revenue growth and 0.4% adjusted EBITDA growth in Q3 2023, as compared to the same time period last year. In a Tuesday earnings call with analysts, Caesars President and COO Anthony Carano attributed the third quarter growth in Las Vegas to strong travel demand, with a robust events calendar in the city.
- While Carano and CEO Tom Reeg said performance growth is expected to continue in the fourth quarter and beyond, the company is still dealing with challenges that arose in the third quarter, including a significant cybersecurity attack and pushback from labor unions.
Dive Insight:
In Las Vegas, particularly, growth was driven by healthy demand trends, according to Carano.
Occupancy in Las Vegas increased to 96.6% from 93.6% during the same period last year, and higher occupancy and higher ADRs “drove record cash hotel revenues, record gaming revenues and record food and beverage revenues” in the market in the third quarter, Carano shared.
Las Vegas’ performance was bolstered by “strong leisure and casino guest demand,” Carano said. As of August, visitor volume was up 4% year over year in the city.
Travelers are increasingly visiting the city for its “robust events calendar and the continued strength of the group and convention segment,” Carano added.
One major event in the third quarter was the inaugural concert at The Sphere venue, which officially opened in September. Carano pointed to future events Formula1, happening later this month, and Super Bowl LVIII in February, as anticipated drivers of demand.
Reeg also shared his optimism, saying the upcoming events will likely boost performance in the fourth quarter and beyond. In a second-quarter earnings call earlier this year, Reeg said he expects increased occupancies from both events.
Despite anticipated strong performance ahead, though, Caesars is facing some challenges.
In August, the company experienced a social engineering attack that led to a data breach impacting members of its customer rewards program. Caesars’ competitor, MGM Resorts International, faced a cybersecurity attack by the same hackers weeks later.
When asked by an analyst if the attack on MGM in any way benefitted Caesars, Reeg said no. “I will tell you one thing I know for certain after this quarter is that nobody benefits from a cybersecurity incident.”
Caesars is also facing labor struggles with union workers in the Culinary Union, a labor union representing some 60,000 hospitality workers across Nevada. In recent weeks, union members voted to authorize a city-wide strike in Las Vegas. The workers are seeking wage increases and workplace protections.
“We are in active dialogue with the union,” Reeg said. “When we reach an agreement, the contract is going to be the largest increase that our employees have seen in the four decades since we started interacting with the Culinary Union. We’re going to work with the union to make sure we do this right for all parties.”
Reeg declined to comment on the timeline in which that agreement could be reached, but said negotiations are ongoing, including meetings upcoming this week.
