The Las Vegas Advisor reported that the CEO of Caesars Entertainment, Tom Reeg, and senior vice president of corporate finance, Brian Agnew, had a meeting with Deutsche Bank analyst Carlo Santarelli.
Caesars Anticipates $25M Increase in Cash Flow from Formula One Race
During the meeting, Santarelli praised Caesars’ “operational prudence” and online execution, along with its stable operations in Las Vegas. Caesars also revealed that it is anticipating a $25 million cash flow increase from the Formula One race, which the company expects to be more profitable than next year’s Super Bowl.
In terms of investment in Las Vegas, Reeg and Agnew do not expect much activity, but management believes that there are smaller projects across the portfolio, each of which can garner more than 20% returns on investment.
During the conversation with Santarelli, Reeg and Agnew stated that Caesars, with its extensive portfolio of physical casinos, is not expected to engage in a potential Las Vegas Strip consolidation in 2023, either as a purchaser or vendor. Furthermore, the operator is unlikely to make significant investments in upgrading its properties located in that area.
Meanwhile, Caesars has ambitious goals for its online products, aiming for $500 million in annual cash flow and a doubling of its online casino market share. Caesars also plans to cut back on promotions and partnerships that are considered economically inefficient, in order to improve its cash-flow margins.
Success of Horseshoe in Lake Charles Could Prompt Caesars to Construct New Hotel Tower
Outside of Las Vegas, the process to license three new Las Vegas-style casinos in the New York City area is ongoing, with community-advisory boards having the power to scuttle proposals even before they get to the siting-board level.
Caesars has a relatively thrifty Times Square pitch, but it raises concerns about congestion and zoning, which could put the proposal in jeopardy. Wynn Resorts’ proposal for Hudson Yards also faces opposition from residents and the need to build a platform of 10 acres.
According to reports, Caesars has expressed satisfaction with the initial performance of its Horseshoe Lake Charles project, which is projected to generate $60 million in annual revenue. Nonetheless, Caesars management has expressed concern over the potential inadequacy of the 170 hotel rooms at the property.
Looking ahead, the success of the recently renovated Horseshoe in Lake Charles, Louisiana, may lead Caesars to construct another hotel tower in the area, as the current room supply is limited in comparison to competing properties in the city.