Dive Brief:
- Caesars Entertainment posted performance declines for the first quarter of 2024, including a 10% year-on-year drop in adjusted EBITDA and a roughly $88 million dip in net revenue when compared to the same quarter in 2023.
- In an earnings call with analysts, CEO Tom Reeg said negative circumstances including inclement weather and lower-than-expected online sports outcomes in the company’s digital division caused a “one-time” negative impact of roughly $75 million.
- Despite the dip, Las Vegas performance was strong in Q1, with the segment delivering $440 million of adjusted EBITDA, the second-best Q1 on record. Occupancy in Las Vegas was 97.6%, an all-time high for the quarter.
Dive Insight:
“We're not in the habit of reporting quarters like this,” Reeg said on the call. “This was not an instance of a few players beating us. This was kind of repeated butt-kicking broadly based throughout the quarter.”
Beyond weather — which Hilton also said affected its RevPAR in the first quarter — the rescheduling of Adele’s Las Vegas residency also impacted Caesars properties, Reeg said. The singer’s shows, originally planned for March, will now take place in October.
Overall, Vegas “remains very, very strong,” according to Reeg. Record occupancy drove the company’s highest-ever Q1 hotel and food and beverage revenues. And a boost in travel around the Super Bowl, held this February in the city, made up for the loss of business from Con/Agg, the construction expo held at Caesars Palace last March that drew more than 130,000 attendees and did not take place this year.
Operational costs at Las Vegas properties, however, were higher than in the same quarter last year due to new contracts that netted union workers their highest-ever wage increases. “If you think about running these properties at over 97% occupancy, you're fully staffed,” Reeg said.
On the development end, Caesars’ forthcoming New Orleans property faced “construction disruption,” Reeg said, noting he now expects construction to finish by Labor Day. Caesars Virginia will also open its permanent facility in Danville, Virginia, later this year.
“In 2024, we'll finish several construction projects that we expect to generate strong returns,” Reeg added.
Despite the loss of Con/Agg, Caesars expects its group and convention travel to be even higher this year than in 2022 and 2023, two years that set records for travel volumes in the segment.
Caesars also posted an EBITDA decline in the fourth quarter of 2023, down 2% year-on-year. Headwinds in that quarter included the $100 million transformation of the Jubilee Tower at Horseshoe Las Vegas, which kept roughly 700 rooms offline.
