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twitterVegas properties hit hard as Harrah’s reports wider 3Q loss
Published Tuesday, Oct. 27, 2009 | 8:01 a.m.
Updated Tuesday, Oct. 27, 2009 | 1:04 p.m.
Harrah's Entertainment Financial Information
| 3Q 2009 | 3Q 2008 | % Change | 2Q 2009 | |
|---|---|---|---|---|
| Revenue | $2.282 billion | $2.645 billion | -13.7% | $2.271 billion |
| Net income* | ($1.621 billion) | ($123.2 million) | N/A | $2.272 billion |
| *From continuing operations |
Still struggling with the recession, Harrah's Entertainment Inc. of Las Vegas today posted a $1.33 billion charge against earnings to write down the value of certain assets around the country, and overall posted a third quarter loss from continuing operations after taxes of $1.621 billion.
The loss, compared to a loss of $123.2 million a year earlier, was driven by the one-time writeoff as well as a 13.7 percent decline in quarterly revenue to $2.282 billion.
The Las Vegas market was hit especially hard, with revenue down 17.5 percent during the quarter ended Sept. 30 to $657.2 million.
Harrah's is a big operator on and near the Las Vegas Strip with properties such as Caesars Palace, the Rio, Paris, Bally's, Flamingo, Harrah's and the Imperial Palace -- and like other operators in town it's struggling with an oversupply of hotel rooms and gaming capacity as the economic downturn has reduced travel to the U.S. casino capital.
The world's largest casino operator said the charge of $1.33 billion for the impairment of goodwill and other intangible assets was mostly related to properties in the Las Vegas, Atlantic City and Illinois/Indiana regions. Such accounting charges reflect reductions in expected future profits from the affected assets.
With the recession reducing activity at its table games and slot machines and putting downward pressure on hotel room rates, the company also reported a big decline in the operating measure of earnings before interest, taxes, depreciation and amortization (EBITDA).
EBITDA companywide in the 2009 quarter of $539.2 million was down from $633.9 million in the year-ago quarter.
Harrah's said $875.8 million of the impairment charge related to certain of its Las Vegas Strip properties, which is on top of a $225.1 million charge for those properties in the second quarter. Harrah's said that without the impairment charges, income from operations would have been $278.4 million vs. $349.6 million in the year-ago quarter.
"While hotel occupancy remained strong at more than 90 percent, third-quarter and year-to-date revenues declined in the Las Vegas Region from the 2008 periods due to lower spend per visitor and weakness in the group-travel business, which led to lower average daily room rates," Harrah's said in its earnings report.
Elsewhere in Nevada, quarterly revenue tumbled 17 percent to $141.5 million for Harrah's properties in Laughlin, Reno and Lake Tahoe.
"The third quarter was challenging from an operations standpoint, as lower spending by consumers affected by the global recession continued to impact revenues," Chairman and Chief Executive Gary Loveman said in a statement.
"During the third quarter, we continued our focus on aligning expenses with revenues and addressing our capital structure to cope with the protracted economic slump," Loveman said in the statement.
Discussion: 47 comments so far…
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anyone know the amount of outstanding debt they have to service? That seems to be the problem......
The big deals they offered really did the trick.The comment boxes they put out are more than just trash bins guys.Maybe ya outta start reading a few of the suggestions that people are writeing down!
Well another example of an equity firm getting their hand into something they know nothing about, run the company to the ground and then sell bits and piece out to the highest bidder. The only one getting anything out of it are the higher up exec. Way to go corporate america.
I wonder if Gary Loveman's bonus was included in the company's write down... It would have accounted for close to 8% of that operational charge. hmm!
harrah's turns places into dumps-look at the rio
$23 billion and change in debt and rising because all they know is to buy other places out so they can run their competition into the ground too.
Maybe Harrahs can bring a SUPER-STAR "has been" out of retirement to fill one of those empty venues at its hotels.
Yes, bring in Adrian Zmed and Solid Good dancers
I work for a Harrahs property and I take offense to these negative remarks about my company. All of the big corporations are feeling the effects of a weak economy. How do you explain the Wynn, MGM, Venetian and Boyd gamings record quarterly losses?? Are you going to blame their CEO's for their poor performance? If people don't have a job they can't spend money on trips to Las Vegas PERIOD!! The people that do come are more frugal with their money than in the past...........
Oh, Denver...let's correct a few things, OK?
Q3 Net Income:
Harrah's: -$1.624 Billion
Wynn: $34.2 Million
Boyd: $6.3 Million
LVS: Announcing later this week
You see, dear Denver, all the others posted a PROFIT, albeit lower than the same quarter a year ago. Harrah's, however, lost $1.6 Billion. Who do you blame? Gary boy that jockeyed as hard as he could for the LBO that made him $90 Million richer or Steve Wynn that is still turning a profit?
Before you claim 'record quarterly losses,' do a little research. It will make you appear considerably less foolish.
No employee should be loyal to any company, unless it's one they own outright, ever.
At the FIRST sign of trouble, most companies will dump you, their "loyal" employee, faster than you can say "how's my stock price."
THESE "CEO's" ARE TRAINED TO DUMP YOU. THE BUSINESS SCHOOLS TEACH THIS AD HOMINEM.
Since most companies BORROW money to operate and to SPECULATE in new markets, they RARELY save any dough for bad times to pay workers, keep the doors open, provide cost-efficient health care, etc.
THE BUSINESS SCHOOLS TEACH THIS, ALSO.
"CEO's" ALSO LEARN TO TAP-DANCE AROUND THEIR SCREW-UPS, and are RARELY held ACCOUNTABLE BY THEIR COZY "PAL" BOARDS.
Unbelievable! If any management team anywhere, in any industry does not get it, it's Harrahs. Why go to Vegas to gamble anymore when a customer gets better odds someplace else? The nice beaches we have??? "aligning expenses with revenue..." -- The service has tanked. I don't mean a lack of a friendly greeting. I mean the elevators, the carpet, the lobbies, the wait times. So, now the customers who come and don't gamble because they know about the odds changing are finding dumpy places. That will surely bring them back. Can somebody please wake up the management team!!!!!!
I just gotta jump in on one more item.
THE REASON THAT NOBODY'S GOT ANY MONEY TO COME HERE TO GAMBLE IS BECAUSE THE U.S. IS MERELY NOTHING MORE THAN A SERVICE BASED ECONOMY. MANUFACTURING JOBS ARE DEAD AND GONE...!
WE ARE NOW NOTHING MORE THAN JUST MOSTLY SALESPEOPLE AND CUSTOMER SERVICE HELP-MATES.
EVEN THE HEAD OF GE, JEFFREY IMMELT SAID (AP article) IN JUNE '09:
"...The U.S. has faltered as it has moved toward a service- and consumption-based economy, Immelt said. He singled out financial services, which he said comprise 45 percent of earnings of companies on the Standard & Poor's 500 index, up from 10 percent a quarter-century earlier...."
So now the only "industry" left of consequence, which is 70% of GDP, is REAL ESTATE, and that's built on a HOUSE OF CARDS of BORROWING and TEMPORARY TAX CREDITS.
AND THE ONLY PEOPLE WHO MAKE ANY MONEY OFF OF THAT ARE THE REAL ESTATE BROKERS, LOAN ORIGINATORS, APPRAISERS, DEVELOPERS, AND HOUSEBUILDERS, of which ARE FIRMLY ENTRENCHED IN EVERY LEVEL OF ELECTED GOVERNMENT.
Here's proof:
"Senate May Vote on Extending Tax Credit for Home Buyers (CNBC Oct 26,'09)"
"...Reid's offer is a counterproposal to Senator Johnny Isakson who wants to extend the $8,000 tax credit through June and expand it to all buyers of homes that will be a primary residence.
Isakson, a former real estate agent, would also raise the income limit of eligible home buyers to $300,000 per family from the current $150,000 limit...."
DID YOU GET THAT..? THIS GUY ISAKSON'S FROM THE REAL ESTATE INDUSTRY.
Our economic underpinnings are so bad that the sorry real estate market is now all we have left.
NOT ONE PROPOSAL TO GET US OUT OF THIS ECONOMIC MESS IS ABOUT "NEW FACTORIES" or "MANUFACTURING PLANTS". REAL JOBS WITH REAL PAY AND REAL DISCRETIONARY INCOME.
Now you know why we're in it DEEP AND ABOVE THE EYEBALLS.
Denver, your loyality towards your greedy company doesn't help much. I don't think you get promoted because of it. Unless you know the right people and they like you and thus have plans with you...
From my countless visits in Vegas I can confirm that I hate Harrah's entertainment. Not only did they run down the casinos, they also got too greedy and did not stopped building and increasing the number of gaming space and hotel rooms when indicators told so. Caesars Palace has turned from a nice theme hotel to a mammut monster facilty where it's difficult to find the exit. No matter where you go you end up in the casino, even if you do a little detour at the Forum Shops. I once got so tired from walking through this messy place that I had to sit down and have a drink.
Slot machines are tight, videopoker sux, the Caesars Poker Room is full of arrogant employees, and you don't know how big the high hand jackpot is although they keep raking these additional dollars at every table...
But that's not all of my disappointment: The parking lots are too far away because the entire building is too big. Plus, let's take a quick look across the Strip and investigate the Harrah's Casino. All these vendors in front of the building plus all the loud music from all sides makes it most unpleasant to go gambling over there. At best, this facility is good enough to walk through, cool off from the heat outside and then exit fast on the North End and walk to the Venetian or the Mirage.
The debt load will kill Harrah's operational profit and they keep adding new debts by buying the Planet Hollywood. How crazy can a CEO be to do that????
As a consequence, private investors may be searched and the company may sell one or more of its properties. Shrink down until the company is small enough to become profitable again. Plus, chapter 11 and re-organizing their debt load, friendos!!!
I don't care if Harrah's will survive or not. I will refuse to play there like I did so many years already. These greedy managers should get fired, but no bonus being paid as exit parachute money!!!
Good luck.
Enough is enough. Only if people completely quit gambling on the Strip that will help. The tourists must wake up and realize what kind of horse - split is going on there.....
Iv'e said it before ans I'll say it again and again.. Big three Vegas Casinos GIVE AWAY THE ROOMS AND FOOD, AND LOOSEN UP THE SLOTS BEFORE IT'S TOO LATE!!!!!!
I blame the $500 bottles of booze. Management bought that folly hook, line and sinker.
Environprotector:
It's NEVER too late, come on man, you are behind the times!!!!!
The answer is this: Open City Center, Charge $489 night for "Hot trendy" rooms, $64.99 for a fried chicken and 14 types of jello buffet, $189.00 for shows (Get some old coot from the 60's)
I guarantee there will be at least 115 people who will flock to City Center
Then......MORE BAD NEWS, NO PROFIT, NO SALES
Boomer111 : I honestly wonder if City Center is really going to fully open ever!
FYI:
World-wide gaming revenues are larger than movies, spectator sports, theme parks, cruise ships and recorded music COMBINE!
: )
CityCenter= City Cemetery.
3 months after being in operation, MGM Mirage will announce a hefty cut in profit and probably try to raise more capital. The stocks will tumble down back to 5 dollars per share and the people will be gruff.
They will feel the pain now for arrogant and greedy management without thinking of its fatal consequences. Not even 50 per cent of the city center condos will be sold. But the banks want to see the money some day.....
Good night, MGM.
It is not just in Las Vegas that Harrahs is falling behind. We have 2 Harrah's properties near us (St. Louis & Metropolis, IL) that seem to be in decline. It is sad to go there and see the same old "tight" slots not getting played.
Fire that fat pig Loveman!!!!
Just came back from Reno. Rumor has it that Harrah's is going bankrupt. No wonder, we play keno pennies, max play, and the payouts were one-quarter of those at Cal Neva. I know Cal-Neva may have some issues but we stayed there 3 weeks, never had to pay for a room or a meal, God, I Love Reno!
Glad too see less stupid people comming here loosing the housing money.Get a real job people you suck denver21
may this town suffer more,or get a real industry throw out these greedy broke bastards.
Add some more 6/5 blackjack you greedy Harrah's pigs.
Chapter 7 baby.....they are going right down the tubes!!!!
and the sooner the better,,lol
and it will never come back,,its down its out and its real,,,screw you people,,,
lets watch another gambling looser go bankrupt,,god i love america,,
And don't ever forget the over 600 Million USD the fat man paid for the toxic landfill "golf course" in Macau, one week before the Macau government said no more casino licenses to be granted. you can write a book about this "deal"
Man I sense real bitterness and anger out there! Hey casino execs are you listening?
Denver21:
Lets go back to Harrah's Focus training. (Hard to do this without the graph)
Good Management: keeping the guest satisfied + keeping the employees satisfied= increased profits and guest coming back for more. :::
The guests aren't happy when they have to pay $45 for the Seafood Buffet at the Rio. Then have to pay more to have lobster while having paying a tip in an automated vending cashier (because Harrahs doesn't want to pay for six human cashiers) just to get into the buffet. this price do not even include an alcohol beverage! (that takes away their money to gamble) + Employees have to deal with angry customers feeling ripped off from being nickeled & dimed in all the restaurants, clubs, pool service, gift shops, and paying for substandard internet service. While not getting tips from a tapped out guest, even though the employee personally provided a wonderful service. This leads to the employee being stressed out for not getting what he/she deserves, while the employeer keeps asking for you to do more. = Guest wanting to leave in droves & employees that want to flee a sinking ship (I've seen many of former Harrah's Employee working at City Center Employee Office.)
Let us go back to the original system that made Las Vegas work.
Low Prices for Food + Low Prices for Hotel Rooms = More money for guest to gamble and feel overjoyed to come back for more.
Vegasvampire : AMEN BROTHER!
Loveman: "THINGS WILL TURN AROUND, ABSOLUTELY. In Fact we are
raising our rates back to 2005." People will flock in, no doubt in my
pudgy mind."
Imperial Palace: $559. per night. (buffet $69.50 PP)
Rio: $826. per night (buffet $82.50 PP)
My next trip to a strip casino will be the day after I read that they have eliminated the 'shuffle machines' from their table games!
It's a waste reading,or even posting on these articals anymore.It's obveious the exec's arent listening.All you have to do is walk into any casino on the strip,and there all dead!No cheering,NO yelling,NO bells,NO whistles!I for one want to walk into a place thats loud and people are haveing fun.Walk into any strip property and all you see are zombies!And that includes the employees!
Then we should put these things on the casinos' facebook page. So they could look me up, rate my play on those Harrah's invented player's club cards, then expose me for not playing enough on baccarat. I miss when a comp was a comp and you didn't have to place $20,000 in bets to get a comp room.
It's the end of the world as we know it....
Here is how the Total Awards (Harrahs Players Card) works:
Gold - The entry level card that is free to all 21 years or older.
Platinum - Higher tier requiring 4,000 tier credits earned in a calendar year.
Diamond - Higher tier requiring 11,000 tier credits earned in a calendar year. (Raised from 10,000 tier credits earned in a calendar year in 2008).
Seven Stars - The highest tier, requiring 100,000 tier credits. Members are not automatically enrolled as they must be invited by their casino host. Some qualifications, aside from tier credits, include not having any outstanding markers (credit), and not being a security issue at any Harrah's property. Guests at this level are the priority for all casino workers. Seven Star guests are provided with priority lines and first available service at participating Harrah's Entertainment properties. Seven Stars members are also entitled to up to four nights complimentary at any Harrah's property, given at least 48 hours notice is provided. Also, Seven Stars receive 25% off spa services, and complimentary entry into spas and health clubs at Harrah's, as well as gift shops. These guests are also entitled to one free trip to any Harrah's property per year. Included is complimentary airfare, hotel stay, food, and television viewing. Alternatively, they may also take a complimentary annual cruise. All Seven Stars guests are entitled to complimentary hotel stays and television viewing (including adult entertainment) at any Harrah's property. Also, they are entitled to a birthday dinner at the property and restaurant of their choice, with up to three additional guests. Furthermore, they are entitled to one complimentary spa service per year, up to $100 in value. There is also a separate booklet of merchandise only available for purchase by Seven Star guests, including luxury automobiles. Finally, all Seven Star members are eligible to have one companion member per year. These companion members are entitled to the same amenities as a regular Seven Star guest. However, they are excluded from redeeming the annual trip and other larger amenities. Other perks vary from property to property, due to the further integration of the Total Rewards system in all the properties.
Chairman's Club - Currently there are very few Chairman's Club members. These guests are considered Harrah's best customers, and are entitled to all Seven Star benefits, as well as other perks and benefits as bestowed by individual properties the customers choose to visit. Harrah's might decide to grant Chairman's Club benefits to their highest player at each property.
The first chairman member for which the program was created for was Terry Watanabe (Does this name sound familar?). The chairman card is signed by Gary Loveman, the CEO of Harrahs.
Ironically the best value Harrah's has is the old IP, and I hear they are adding a Hash House A GO-GO which is one of the best restaurants and deals in Vegas
yeah, I also remember that casino well. They used to have great hamburgers at top prices at the 3rd or 4th floor and it was always fun for me to go there, especially on the weeekends when the Strip was too packed to go eat at any other regular restaurant. Imperial Palace's Rooms are available at decent rates and gambling is ok, too. Old Style Vegas = Good Vegas.
The Indian Casinos are taking 69% of Vegas gaming business, and will gain ground in the coming years. All these fancy Hotels, Casinos don't get the people there anymore. Indian Casinos are getting bigger and have Comps that Vegas can't match.
Bring back the mob! No wait, they never left.
qwill : Bring back the themed resorts! the free rooms, the comps, the low priced steak and lobster specials, half naked cocktail waitresses, free quality entertainment in the lounges, Bring back the fun that WAS Vegas..
environprotector....if thousands of people go to the casino because of the bargain steak and eggs or the 1.99 usd buffet, and the tourists flying into town just to get the free room with the fun book, who's possibly going to pay for all that?
All casinos are facing tough economical conditions and they all have their individual break-even point. It's tough to give away free stuff if they can't make up for it somehow. In other words: It takes some gamble to get these expenses back into the cash register. would you be the one to play the slots and b-j until you have lost enough to make up for the free steak and free room?
HARRAHS SHOULD HAVE POSITIONED THEM SELVES IN 2002 TO BE PLAYERS IN MACAU - THEY WERE A SLEEP AT THE SWITCH --- BUT IF THEY PARTNER WITH A VERY CREATIVE MARKETING ENTREPRENUER TO BUILD A NEW & COMPELLING PALATIAL MEGA THEME ON THE LAS VEGAS STRIP TO BE COMPLETED BY 2015 - THEY WILL BE ABLE TO STEAL THE THUNDER AWAY FROM ALL THE OTHER UPSCALE MEGA THEMES - & FIVE YEARS FROM NOW VEGAS WILL HAVE COME BACK SLOWLY TO ABSORB AN ALL SUITE MEGA THEME TO RIVAL ALL OF THE OTHER THEMES ON THE LAS VEGAS STRIP !!! SHELDON ADELSON -STEVE WYNN & KIRK KERKORIAN ARE WINNERS FOR POSITIONING THEM SELVES IN MACAU --- & EVENTUALLY THEY WILL BE VERY SUCCESSFUL WITH MACAU & THE LAS VEGAS STRIP - OVER THE NEXT FIVE YEARS !!!
SHELDON ADELSON MUST FIND A STRATEGIC PARTNER OR PARTNERS TO COMPLETE THE COTAI STRIP - WHICH WILL MIRROR THE LAS VEGAS STRIP !!!
& IN ABOUT FIVE TO TEN YEARS SHELDON ADELSON WILL BE ONE OF THE RICHEST MEN IN THE WORLD AGAIN
KIRK KERKORIAN IS FINANCIALLY CHALLENGED WITH CITY CENTER & THE CORPORATE DECISION MAKERS - WHO DO NOT HAVE ANY CREATIVE MARKETING THEME VISION - LIKE A JAY SARNO WHO CREATED CAESARS PALACE -THEY CREATED A 67 ACRE PROJECT WITH A MIXED USE APPLICATION - YOU DO NOT TAKE 67 ACRES OF PRIME LAS VEGAS STRIP PROPERTY & CREATE ONE HOTEL CASINO BY THE NAME OF THE ARIA & EXPECT IT TO FINANCIALLY CARRY ALL OF THE OTHER BUILDINGS TOTALLING - ELEVEN BILLION DOLLARS !!
THAT IS BASIC SIXTH GRADE MATH & IT IS THE FINANCIAL RECIPE FOR FAILURE !!!
THE CORPORATE DECISION MAKERS MEANT WELL - BUT WERE CLUE LESS & NAIVE ABOUT NOT UNDERSTANDING THE PROPERTY SHOULD HAVE BEEN USED FOR THREE - INCOME PRODUCING -PALATIAL MEGA STRUCTURE THEME HOTEL CASINOS !!!
ACADEMIC & INTELLECTUAL ABILITY NOT COUPLED WITH THE CREATIVE MARKETING VISIONARY TALENT WAS THERE WEAKNESS !!!
NAIVE EGO'S THAT MEAN WELL PLAYED MONOPOPLY WITH KIRK KERKORIAN & OTHER PEOPLES MONIES TO CREATE A CORPORATE TRAGEDY THAT COULD HAVE BEEN AVOIDED - IF THE INTELLECTUAL PRESIDENT & CEO ALSO HAD ANOTHER PRESIDENT & CEO THAT WAS A CREATIVE MARKETING VISIONARY LIKE A JAY SARNO TO CREATE THE CITY CENTER CONCEPT- CITY CENTER WOULD HAVE BEEN SUCCESSFUL
THE CORPORATE LESSON TO BE LEARNED FROM THIS FINANCIAL FIASCO - IS TO ALWAYS HAVE TWO CEO"S TO PERFORM THE PROPER CHECKS & BALANCES - TO AVOID - WELL INTENDED INTELLECTUAL EGO'S WHO DO NOT HAVE A CLUE ABOUT WHAT THE UPSCALE MARKET IS REALLY CRYING OUT FOR - TO FORGE AHEAD WITH RECKLESS ABANDON - INNOCENTLY !!
EGO COULD BE YOUR BIGGEST ENEMY IF NOT USED PROPERLY !!!
KIRK KERKORIAN WAS A VERY POOR BOY WHO HAD TO BE A PRIZE FIGHTER - NAMED RIFLE RIGHT & A PILOT FLYING SUICIDE MISSIONS FOR THE R A F DURING WORLD WAR TWO - TO MAKE A LIVING - BECAUSE HE NEVER HAD THE ACADEMIC & INTELLECTUAL SKILLS OF THE ABOVE DECISION MAKERS !!!
UNFORTUNATLY HE BET ON THE WRONG HORSE THIS TIME - WITH INEPT LEADERSHIP & THEY SOLD HIM A BILL OF GOODS - THAT WAS NEVER FINANCIALLY SUSTAINABLE !!!