Las Vegas-based Caesars Entertainment joined the club of gaming companies boosted by improved Southern Nevada results, despite an overall third-quarter revenue decline primarily caused by Hurricane Irene.
Caesars reported income of $198.2 million on revenue of $2.25 billion for the quarter that ended Sept. 30. A year ago, the company had income of $175.7 million on revenue of $2.29 billion.
Company officials attributed the 12.8 percent increase in profits to cost cuts, efficiency initiatives and organizational realignments. They blamed the 1.5 percent decline in revenue to closures at its four Atlantic City properties on what traditionally has been one of the market’s strongest weekends.
One of the company’s signature events — the World Series of Poker — is expected to wrap up tonight at the Rio.
Gary Loveman, the company’s Boston-based chairman and CEO, quipped that the prize money being distributed in this year’s poker event is $10 million more than the entire payroll of the New York Yankees.
While the late-August hurricane that battered the East Coast closed casinos for at least three days, Caesars found bright spots in Las Vegas and in potential growth overseas and in Ohio, Maryland, Massachusetts and Florida.
“While weather-related property closures in the Atlantic City region impacted our overall third-quarter results, we saw strengthening fundamentals in our Nevada and international operations,” Loveman said in a release accompanying this morning’s earnings announcement.
“During the quarter, our efficiency initiatives and organizational realignments not only produced $85 million in additional cost savings but are also expected to expedite decision-making and increase our effectiveness, setting the stage for sustained growth in the years ahead,” Loveman said.
“We achieved the highest customer-satisfaction scores in the company’s history and saw the expansion of Total Rewards Marketplace to more than 2,500 retailers from about 500 in the second quarter,” he said.
Total Rewards is Caesars’ loyalty club, and the program has expanded to enable members to exchange points at retail outlets.
In Las Vegas, where Caesars operates Caesars Palace, Bally’s Las Vegas, Flamingo, Harrah’s, Imperial Palace, Paris, Planet Hollywood, Rio and Bill’s Gamblin’ Hall & Saloon, the company reported a 2.9 percent increase in revenue to $733.1 million and a 24.2 percent increase in income to $88.2 million.
In Las Vegas, visitation to properties increased by 3 percent in the third quarter and 3.7 percent for the first nine months of the year. Spending at those properties rose 3.1 percent for the quarter and 4.6 percent for the nine months.
The average daily room rate was up 9.5 percent for the quarter and 7.5 percent for 2011 to date, and occupancy rates climbed 3.3 and 3.7 percentage points, respectively.
Loveman attributed most of the Las Vegas growth to VIP customers.
Caesars’ other Nevada properties also fared well for the quarter, with properties in Laughlin, Reno and two in Lake Tahoe responsible for a 6.2 percent increase in revenue to $140.9 million and a 63.8 percent bump in income to $30.3 million.
Loveman said one of the biggest projects for the company is the completion of Caesars Palace’s Octavius Tower, which will increase the property’s room count by 662 and is scheduled to open in early January.
The company also is working on two projects in Ohio, near Cleveland and Cincinnati, with partner Rock Gaming LLC and those casinos are due to open in March.
Loveman said Caesars in the only qualified bidder for a casino project near Baltimore’s Inner Harbor, and the company is continuing its consideration of a project near Boston with partner Suffolk Downs. The company will meet Monday with Maryland authorities.
During the conference call with investors, Loveman said Caesars is interested in the prospects of gaming in Miami, but probably would have to partner with another company to contend for a license.
Internationally, ground was broken on the company’s five-star resort on Hainan Island in China during the quarter.
Loveman, who made a presentation on integrated resorts to Japanese officials earlier this month, said he expects some Asian countries to expedite their licensing and construction timetables in light of the major success of Las Vegas Sands’ property in Singapore and the dramatic downturn in tourism in Japan resulting from spring’s earthquake and tsunami.
Loveman also said he is optimistic about the passage of federal Internet poker legislation and is pleased that more of his gaming colleagues have climbed on the bandwagon to support legalization.
He estimated the U.S. market for online poker at $5 billion a year, which he considers “conservative,” and he said that it would take 12 to 14 months for Caesars to get online poker operating once a bill is signed into law.