Facebook
Fark
Digg
Reddit
Stumble
Published Wednesday, Aug. 4, 2010 | 6:53 a.m.
Updated Wednesday, Aug. 4, 2010 | 8:06 a.m.
Gary Loveman, CEO of Caesars Entertainment
Harrah's Entertainment Inc. today reported a second quarter loss and continued sluggish business conditions on the Las Vegas Strip, but CEO Gary Loveman said business may be stabilizing after two years of revenue declines caused by the recession.
The Las Vegas-based gaming company lost $274 million in the quarter vs. a profit a year earlier of $2.289 billion. The 2009 quarter included special one-time gains from the early extinguishment of debt.
Net revenue for the 2010 quarter was $2.22 billion, off slightly from $2.271 billion in the year-ago quarter.
"During the second quarter, we selectively increased our marketing investments and labor costs in anticipation of an even stronger demand environment, leading to lower operating margins," Loveman said in a statement. "However, after two years of the worst economic downturn since the Great Depression, it appears that year-over-year revenue declines are moderating in virtually all of our markets. To ensure our margins are maintained, we will remain vigilant with respect to our expense structure.
"Looking ahead, we're encouraged by the recovery of group business in Las Vegas during the second quarter and we expect group business to continue to outperform 2009 for the rest of this year," Loveman said. "We're also encouraged by the positive overall revenue trends in the second quarter and expect those to continue, as well."
The company's acquisition of Planet Hollywood boosted revenue for Harrah's on and near the Las Vegas Strip, where the company also owns Bally's Las Vegas, Bill's Gamblin' Hall & Saloon, Caesars Palace, Flamingo Las Vegas, Harrah's Las Vegas, Imperial Palace, Paris and the Rio.
Harrah's said these properties produced net revenue in the quarter of $712.7 million, up 1.1 percent from a year ago.
Income from operations for these properties totaled $72.1 million vs. a loss one year ago of $123.3 million.
However, Harrah's said in today's report: "(Las Vegas Strip) same-store revenue declines of 8.2 percent in the 2010 second quarter resulted from lower room rates due to increased room inventory in the market and lower spend per visitor."
Harrah's, the nation's largest hotel-casino operator by revenue in 2009, reported second quarter results elsewhere around the country for its gaming and hotel properties:
--Atlantic City net revenue fell 5.5 percent to $487.9 million
--Louisiana/Mississippi net revenue fell 5.1 percent to $298.7 million
--Iowa/Missouri net revenue fell 2.4 percent to $186.1 million
--Illinois/Indiana net revenue fell 5.6 percent to $295.5 million
--Nevada properties in Laughlin, Reno and Lake Tahoe saw net revenue fall 3.2 percent to $110.8 million.
Deutsche Bank analyst Andrew Zarnett, who said today's numbers missed his expectations, noted that during the quarter Harrah's announced deals with its owners Apollo Management and TPG Capital (Texas Pacific Group) and hedge fund manager Paulson & Co. in which Apollo, Paulson and TPG are exchanging $1.118 billion of Harrah's debt in return for a 15.6 percent equity stake.
Harrah's is raising $557 million as part of the transaction by selling some debt to Apollo, Paulson and TPG and intends to use the funds to reduce other debt and fund new investments in domestic and international markets, with Zarnett saying international deals are the most likely.
"The announced debt-for-equity exchange provides us with additional liquidity to pursue growth opportunities domestically and internationally, reduce our debt and lower our interest expense," Loveman said in today's statement. "I'm particularly gratified by the confidence demonstrated by Apollo, TPG and Paulson in the performance of our company and in our prospects for the future."
"We view this event as a positive for the (Harrah's Operating Co.) credit, given that the transaction bolsters Harrah’s liquidity over the near-term, reduces debt maturities and signals to the market that the sponsors (Apollo and TPG) are willing to sell equity at a price," Zarnett said in a research note.
Loveman also said: "I believe we're well-positioned for an eventual legalization of online gaming in the United States, and more capable of capitalizing on additional growth opportunities than at any time in the past two years."
" CEO Gary Loveman said business may be stabilizing after two years of revenue declines caused by the recession."
A bunch of spin BS !!
What do they expect-they market to 21 yr olds who bring 40.00 spending money 1 gambles and there 6 friends sit around and watch them and suck up 200.00 in drinks.
Any casino without investments in China and Singapore are in trouble for the next 3 - 5 years.
If you could get the Airlines to lower their prices to Las Vegas, the people would come and would have more money to spend. You pay anywhere between $400 to $1,000 for ticket then hotel you have no money to spend in Casino's. I would come from Dallas every other week if I could afford airline ticket.
Timemist, if you go through USAirwaysvacations.com and plan a month out or so, you can often get a good hotel (Mirage or equivalent) and airfare for two for $700 or less TOTAL. Thats what we do. We've never paid more than $700-750 for air & hotel on a Vegas trip from DFW.
Every Gaming Company now is reporting huge losses, but they all put an accounting event spin on it to explain it away. It is going to catch up to them...a loss is a loss is a loss.
There's no reason anymore to spend $700 to $1000 to fly to Vegas to gamble. Most people have a casino within a 100 mile drive from their own home.
Sorry, Indian casinos (around here at least) and the dump known as Shreveport/Bossier City, Louisiana aren't true alternatives to Vegas...
A plague to Harrah's . You notice that Loveman and his cronies are still there . Casino's are not turning it around for at least 5-10 years. I don't know how Southpoint is expanding and making money. He has the tightest slots in town even though he advertises LOOSER slots. Avoid the Joint!!
I'll never understand the American corporate strategy of "pursuing growth opportunities" while losing scads of money on existing operations.
I guess that's why I am doomed to sit in front of a Caveman Keno quarter slot machine playing one quarter at a time while the likes of Gary Loveman sits behind a plush desk counting and recounting his bonuses accumulated over the past few years. He understands the magic of deficit financing using someone else's money.
They're making money -- they're employing people -- why all the negative comments?
Granted, they're not making enough to dig out of the hole they put themselves in -- but they're staying in the game. Lighten up folks.
I sure hope they've hit bottom....I could use the company down here.
I am with you SHEETWISE. The employees aren't losing any money by working in these
casino's. Let them put spins on it as much as they want. If they invest in more businesses for the future, good for them, more opportunities for unemployed folks. I haven't seen not one casino company get or ask for a governnment bailout so as long as they are employing people I wish them well in their recovery.
Declines in every market.
What does that foretell?
If they invest in more businesses for the future, good for them, more opportunities for unemployed folks.
Wrong, Denver21. They buy properties and then eliminate jobs. Just ask the unemployed from Planet Hollywood and any other property Harrahs has acquired.
Sorry, Harrah's,
Due to the work slowdown in these parts, the term "Vegas money" isn't in my current vocabulary. Nowadays, it's just trying to earn enough to pay bills and survive and we haven't made a trip yet this year. (we went 3 times last year). I do enjoy Harrah's "value" properties such as IP. Reasonable rates (I don't come to L.V. to watch TV, so the 19 inch tube TV some complain about in the room isn't a problem).
We hope to get back over there soon, so there may be a few hundred more in revenue to add to next quarter's report. See you at the IP. Just don't fall into the "resort fee" trap. I used to be loyal to Stations until the resort fee came along.
KENODAVE, Planet Hollywood was 2 weeks away from being totally broke and not having any funds to pay the thousand or so workers that were employed at that time!! Yes, Harrahs did buy them and yes they did lay off around 100 or so workers but just think what the alternative would have been if Harrahs didn't buy them. Ask the workers who still have jobs there if Harrahs buying them was the right thing for them!!
We just returned from Vegas. I have to say that the more we visit Planet Hollywood the more we feel we would like to stay there. The place just has a great vibe and is a very attractive property.
Harrahs Tunica must be hurting bad. They have sent me offers for free air fare/5night hotel 3 times since May and we only drop maybe $500 max gambling per trip.
I thought these deals were reserved for higher rollers but.....
biggest scum executives in the industry--raping this company over and over and to the brink of bankruptcy while destroying the properties---can't believe these people are still in charge of these properties! they've totally destroyed 4-5 properties in vegas and treat the employees like crap and the customers get crumbs while the "executives" receive tens of millions of dollars. All these joints are using the downturn to fire people and hire more people as "part time" employees with no benefits. Show me one of these "executives" who have taken a pay cut!!!!!NONE
If you used to pay me 3:2 on blackjack and now you pay me 6:5 why would I play there? If a 12 on a field bet on a craps tables at Venetian pays 3:1 but pays only 2:1 at Harrahs, why would I play there? Why wouldn't I conclude that you are also changing the odds on slot machines if I were a slot player?
And he's holding expenses down!? Isn't that another name for service and upkeep? He says he listens to his customers but he doesn't. He listens to the customers he's keeping, maybe, but not to the customers he's loosing. Some boards are puppets, some boards do strategic thinking. Cutting the odds on gaming is bad long-term strategy. Who's stategies are being implemented? The entire state is paying for this kind of strategy in lost revenue and jobs. I'd fire Loveman. Or the Board. Or both. A long time ago.
"We will remain vigilant with respect to our expense structure"! Gary, Why don't you give back some of the millions you have taken from the company ? Oh, and to all the Harrah's customers in the Total Rewards system, Harrah's has lowered the comp ratio at least 3 times over the past years. They lowered it again in July. If you play a $100 dollars a hand for one hour (drum roll please) you will get $2.16 in comps. wow!! Such a deal to go with the 3:2 blackjack! Come on down suckers!!!
Looks like Loveman's been takin' advantage of those all you can eat buffets a few too many times! LOL
As a former employee of Harrahs, it saddens me to hear the comments made about the Shreveport property. I worked at the Horseshoe when Jack Binion owned it and was there when Harrahs purchased it. Harrahs has destroyed the property and continues to do so. Massive lay offs coupled with reduction in customer service has led to these comments. Again, I ask Harrahs managent to listen to the employees.
Greenphantom-
If they don't listen to the customers they probably won't listen to the employees. Funny things is, it seems like the customers and employees are saying the same things. It's almost as if management is thinking that if they can get the monopoly then they don't have to pay anything at all on gaming or give customers a good experience. Management seems to think that customers will have no choice. They seem to forget about the choice of staying away altogether.