Caesars Entertainment Corporation (CEC) achieved a 14.7% increase in net revenues over the course of 2015, thanks to income generated from their hotel ventures. The increase in net proceeds has significantly reduced net loss figures over the course of the year and possibly rescued them from the brink of bankruptcy. The company stated that the adjusted earnings for the quarter was $305 million; a 51.7% year-over-year increase. They also reported annual adjusted earnings of $1.3 billion, a 46.1% increase.
Caesars Entertainment Corporation is the fourth largest gaming corporation in the world, based in Paradise, Nevada; they own 50 casinos and hotels and seven golf courses. Harrah’s Entertainment Incorporated, in their single largest expansion, acquired Caesars Entertainment in 2005, under the umbrella of Harrah’s Entertainment, solidifying their presence on the Las Vegas Strip and establishing more of a global presence. After a turbulent few years, in November 2010 the company was renamed to Caesars Entertainment Corporation to capitalise on the international recognition of the brand.
The healthy bankruptcy?
On 15 January 2015, the company filed for chapter 11 bankruptcy; in a chapter 11 bankruptcy, the debtor remains in the possession of the assets and continues to operate the business under court supervision for the benefit of the creditors. However, when the net revenues of $4.7 billion for Caesars Entertainment Operating Co (CEOC) were accounted for, a 6% increase, to $9.1 billion were calculated for the overall revenue of the company. CEOC operates several properties in Las Vegas as well as a couple of dozen regional casinos.
Hotels are the driver
Mark Frissora, the president and CEO of CEC, stated that the increase in revenue is reflective of their improved hotel takings as well as their enhanced marketing and operating strategies; income from the hotels have benefitted from the double-digit increase in average daily room rates; this delivered approximately $350 million in enterprise-wide year-over-year incremental Earnings before interest, taxes, depreciation and amortization (EBITDA).
Frissora also added that, including revenues from CEOC, 2015 has been the best year for the enterprise; Caesars has achieved consistent operating momentum throughout 2015 and the ability to generate and sustain this level of growth demonstrates the success of the company’s low-cost, high-quality operating model. If the company stays focused on enhancing revenue growths and driving productivity gains, it can surely increase long-term value for the stakeholders, improve cash flow and profit margins.