Underperforming the regionals.




  • CZR reported net revenues of $2,179MM (down 0.4% YoY) and Adjusted Property EBITDA of $469MM (down 2.6% YoY)
  • "First-quarter net revenues decreased....due to reduced visitation by our rated players and the temporary closures of our four properties in the Illinois/Indiana region as a result of weather conditions and flooding, the effects of which were partially offset by the full-quarter impact of Planet Hollywood revenues in first quarter 2011."
  • "Streamlining marketing efforts was a first-quarter focal point. Following an increase in marketing spend during the first half of 2010, Caesars Entertainment began the gradual process of refocusing its customer reinvestment late last year. Year-over-year marketing spend was lower in the first quarter of 2011 than in the year-earlier quarter."
  • "We achieved significant progress in operating efficiencies, guest service and development activities in the first quarter.  Our efforts to reduce expenses led to margin improvements in certain Midwestern properties."
  • "On the growth front, Caesars Entertainment is pursuing development opportunities where we believe significant value can be created. We announced an alliance with Suffolk Downs racetrack in Boston that would expand our distribution should gaming be legalized in Massachusetts. In Las Vegas, strengthening market fundamentals prompted the decision to complete the Octavius tower at Caesars Palace and begin work on the LINQ retail, dining and entertainment project. Financing associated with the Octavius and LINQ projects was completed subsequent to the end of the quarter."
  • "We expect the LINQ and Octavius projects to increase visitation to our properties on the Las Vegas Strip"
  • "Finally, we believe strongly that the recent federal indictments of illegal online poker operators should convince Congress to allow American citizens to play online poker and to allow American companies to compete in a multi-billion-dollar industry.  By acting now to legalize a game enjoyed by millions of adult citizens, Congress can clarify ambiguous federal laws, generate tax revenues for federal and state governments and bring thousands of jobs to this country."
  • "Trips by rated players decreased 8.0 percent from the year-ago quarter, while spend per rated-player trip increased 3.7 percent. These results are indicators of a still weak economy in certain regions in which we operate. Cash average daily room rates saw an increase of 5.8 percent while occupancy percentage increased 3.8 percentage points."
  • Las Vegas Region:
    • "Visitation by our rated players rose 8.7%"
    • "Amount spent per rated-player trip increased 1.0%"
    • "Hotel revenues increased 17.4%... as our cash average daily room rates increased 7.6% and occupancy percentage rose 4.4%"
  • Atlantic City Region:
    •  "Visitation by our rated players decreased 5.8%"
    • "Amount spent per rated-player trip decreased 1.6%"
    • "Hotel revenues decreased 2.4%... as our cash average daily room rates decreased 5.4% while occupancy percentage generally remained flat."
  • "For the remainder of our United States markets, visitation by our rated players for the first quarter 2011 decreased 13.6 percent, while spend per rated-player trip increased 4.4 percent."
  • "Recent flooding of the Ohio and Mississippi Rivers has caused closures of certain of the Company's facilities."
    • "Horseshoe Southern Indiana reopened May 4, 2011 after flood-related closures, while Horseshoe Tunica, Tunica Roadhouse, Harrah's Tunica and Harrah's Metropolis are currently closed due to the flood waters."
    • "In 2010, the five properties contributed approximately 9.4 percent and 8.8 percent, respectively, of the Company's Net Revenues and Property EBITDA. We believe that the financial impact of these closures will be immaterial to our 2011 overall results of operations after taking into account our insurance coverage; however, the timing of the receipt of insurance proceeds is currently unknown."
  • "During the quarter ended March 31, 2011, the Company realized cost savings of $66.2 million and has estimated cost savings yet to be realized of $157.4 as of that date."



  • Active in seeking to grow their business internationally - focused on licensing and management projects using their CZR's brand especially in Asia
  • Total rewards marketplace will allow their members to use their points online
  • CZR portfolio has grown through acquisitions of other brands and therefore they had a decentralized management system. Their reorganization will allow them to centralize a lot of functions in an effort to save costs and become more efficient.
  • Despite a decline in trips per customer, they have seen an increase per visit and more cost efficiencies
  • Completed the purchase of $108MM of CMBS notes
  • $20.8BN of face value of debt at the end of the quarter
  • Their RevPAR increase in Vegas was generated without introducing resort fees
  • Rated trips from lodgers were flat but non-lodger trips declined 6% in AC.
  • Las Vegas is showing continued strength and feel confident that they will continue to see increased YoY results through the balance of 2011
  • The movement of the brands online represents the next big phase of growth for CZR's



  • Rated play is 75-80% of their total play - which is consistent with a quarter ago
  • No change in their no resort fee strategy in Las Vegas
  • Doesn't think that promotional spend has changed dramatically for them and the market in general - they are just trying to be more effective in their promotional strategy
    • The promotional and marketing expenses where a large part of their cost savings - $40MM or so annually of savings in promotional is a good estimate for the year.  They began their cost cutting effort in earnest in 3Q2010.
  • This will be the last quarter where they have the benefit of the YoY comp in Vegas with PH.  Ex PH they would have been flat in Vegas.
  • They feel really good about the way business has been building in Vegas. PH continues to ramp.
  • No material hold impact across their entire portfolio
  • Weather impact - less than $10MM in the Q
  • Market share losses?
    • They are ok with the market share numbers - especially in Midwest. More concerned about EBITDA share and keeping their more profitable customers.
  • Better guests are spending a little more and those gaming dollars are generated a little more efficiently.  Had been a little unfavorable in the past.  Have turned the spiget down or off on unprofitable or marginal business.  Vast majority of their declines in trips are from the unprofitable or marginal guest. They are really more focused on that higher end player. 
  • Gas prices: thinks it's more meaningful for the marginal guests.  They are not enthusiastic about higher gas prices, but so far so good - no impact.
  • Capex: $350-380MM (ex LINK) ... 75% of that is maintenance projects. CMBS property capex is $40MM. $100MM of LINK capex will occur this year - mostly on Octavius Tower
  • The performance of the Vegas portfolio was rather uniform. No real difference between the high and low end properties.  PH continues to ramp though.
  • CMBS paydown in the quarter? Felt that the yield reduction was attractive
  • Same Store property RevPAR in LV was ~9%
  • They charter about 5,000 flights a year from markets where there aren't existing flights to get gamers into some of their markets. They have cut this back a little due to higher fuel prices and weaker consumer spend.  While they cut it back a little, they would like to increase it over time.
  • The so called promotional environment has many layers and so it's not accurate to make blanket statements to characterize the environment. They look at changes and cuts at the micro level.
  • Expect that their operating expenses can continue to come down - especially with the reorganization under way

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