Caesars Entertainment recently announced the completion of the merger with Caesars Acquisition Company (CAC) and conclusion of the restructuring of its subsidiary, Caesars Entertainment Operating Company, Inc. (CEOC). In brief, this means that Caesars Entertainment has restructured and is now out of bankruptcy.
We’ve covered their hotel room renovations over the past year (or two) and now the newly restructured Caesars Entertainment is planning to further invest in its growth strategy. The goal is to realize the benefits of a simpler and less leveraged capital structure. Expect to hear confirmations about some rumors you’ve heard about upgrades, renovations, and expansions.
Here’s some corporate speak from the big man at Caesars Entertainment:
“The conclusion of CEOC’s restructuring leaves Caesars Entertainment with an expected enterprise value of approximately $20 billion based on yesterday’s closing prices. With reduced leverage, increased free cash flow, and the new REIT structure, we are positioned with a solid foundation to pursue a diversified growth strategy,” said Mark Frissora, President and Chief Executive Officer of Caesars Entertainment. “Throughout the restructuring process, Caesars has invested significantly to upgrade and renovate its facilities. Total CapEx from 2015-2017 is expected to exceed $1.5 billion, which will benefit the company going forward. We are also executing hundreds of initiatives to generate incremental revenue, as well as to enhance operational efficiency, guest experiences and employee engagement through technology-driven innovation and process improvement.”
Caesars Entertainment has been planning for this moment for a while. The company will continue to update its hotel rooms in Las Vegas. The first renovations at the Flamingo should be revealed soon. This room upgrades have not only shown greater revenue but greater customer satisfaction.
Caesars is also moving forward with the development of a convention center. The new convention center will be built on undeveloped land near the Flamingo, The Linq and Harrah’s. By the time construction is complete The Linq will have the oldest room product of the three hotels.
The company has approximately $2 billion in cash on hand and a growing cash flow. They are ready to invest in future growth. Caesars Entertainment will continue to look for other new opportunities to monetize their large, underutilized real estate adjacent to the Las Vegas Strip. There have been multiple rumors of Caesars Entertainment building a movie studio behind Bally’s. That could serve as a compliment to the Caesars Entertainment Studio at Caesars Palace.
They’ve already started dabbling with the strip frontage at Caesars Palace. Earlier this year The Killers performed a concert for the Jimmy Kimmel Show. Some of the fountains in front of Caesars Palace are currently covered to make room for a temporary Samsung Galaxy Studio. The studio will close at the end of January. It wouldn’t be surprising to hear about new plans for the space before the year is over.
As Caesars Entertainment continues to emerge from bankruptcy expect an uptick in promotions from Total Rewards. The players club has more than 50 million members around the world.Caesars Entertainment is looking drive revenue growth by improving their marketing techniques and Total Rewards is the easiest way for the company to access people already interested in their properties.
This is a big moment for Caesars Entertainment. Almost all of their Las Vegas hotels have been upgraded in the past couple of years. While the upgrades will continue they will look to explore additional revenue streams. Like it or not, the Vegas landscape will continue to change.