Caesars is likely to sell an iconic Las Vegas Strip casino
Entertainment Caesars (CZR) – Get the report from Caesars Entertainment Inc. and MGM Resorts International (MGM) – Get the MGM Resorts International Report dominate the south and center of the Las Vegas Strip. Both casino companies each own several properties, which gives them enormous flexibility when it comes to attracting guests or even offering free rooms to players.
MGM, for example, may attract younger customers or more casual gamers to its Excalibur, Luxor and New York New York Strip properties. Upscale visitors and high rollers can opt for Mandalay Bay, MGM Grand, or Park MGM. Once the company completes its acquisition of the Cosmopolitan, MGM will add a new hip property that it essentially traded in for the Mirage (an older version serving the same audience).
Caesars has a similar portfolio. It can cater to the lower-end customer with its Bally’s casino, which might get a bit hipper when it’s rebranded as the Horsehoe. Harrah’s and the Linq serve the mid-range and Caesars Palace can woo the high-end, with its integrated Nobu Hotel serving the more upscale guests.
This isn’t the full list of the two companies, but it’s a representative offering that shows how Caesars and MGM dominate all types of Vegas visitors.
Now Caesars General Manager Tom Reeg has made it clear that his company intends to sell one of its Las Vegas Strip properties.
Caesars is looking to sell a Las Vegas Strip casino
Sometimes the sale of a great Las Vegas casino seems to come out of nowhere. In this case, Reeg basically hung up a for sale sign.
“Well, we’re at 23,000 rooms today. You take the rooms out of Rio and then you take out a property, depending on the property, let’s say 3,000 to 4,000 rooms,” he told the conference. of his business. call for fourth quarter results, in response to a question about selling property on the Strip. “So you’re going to be down to, call it, 16,000, 17,000 rooms on the market. That’s about 1/4 of our existing capacity.”
Reeg thinks having fewer rooms will allow Caesars to better fill those rooms.
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“So that’s clearly going to have an impact on our ability to divest the remaining rooms,” he said, “Part of it depends on where those rooms come out of our system, and you have to expect that let that be a factor in terms of how we decided which one we were going to sell.”
The CEO wants to be able to fill the rooms of his company directly via his application, and it must be assumed, his loyalty program. He doesn’t want to depend on online travel agencies, a situation where the company shares revenue and the customer has less of a connection to his brand.
“The less we have to rely on [online-travel-agency] business to fill our rooms, the better both from a customer quality standpoint and from the standpoint of ultimate profitability. And removing the 5,000 or 6,000 rooms from our system while bringing in all those customers who came through Eldorado should have a hugely positive effect on rates once we’re – once all the deals are done,” a- he added.
Which Las Vegas Strip Property Could Caesars Sell?
Reeg gave no indication of which casino Caesars might sell. It seems logical that the flagship Caesars Palace is the only property that simply isn’t available, but it also makes sense to look at where Caesars has invested.
Bally’s would have been a logical competitor, but Caesars decided to make a major investment in renovating this property as the Horseshoe.
Harrah’s and The Linq seem like possibilities, but the two properties are well connected. Unraveling their communal outdoor spaces would be possible, but a more self-contained property seems more likely to sell.
This makes Cromwell, Paris Las Vegas and Flamingo the most logical candidates. And again, although Reeg hasn’t hinted at which property could be sold – and that will likely depend on what offers are made – the Flamingo seems like the most logical candidate, given that it is of an older property ready for an update.
Reeg didn’t seem too concerned about which company might buy the property he’s selling. He made it clear that he saw room for Caesars, MGM and other companies to succeed.
“Our business is not dependent on someone else failing or someone else running out of money,” he said.
“There is enough room in this space for several success stories. I would say at least three or four. We intend to be one of them, but we don’t need anyone from another to fail in Vegas or outside of Vegas for us to succeed.”