Gary Loveman
Harrah's Entertainment Inc. today reported a first quarter loss on lower revenue as the recession continued to reduce spending at its big Las Vegas Strip resorts.
The company said it lost $195.6 million vs. a loss in the year-ago first quarter of $132.7 million as revenue fell 2.9 percent to $2.188 billion.
"Revenue fell due primarily to the continuing impact of the recession on customers’ discretionary spending and reduced aggregate demand, which continued to pressure average daily room rates," Harrah's said in today's earnings report.
“While competitive factors, including increased room inventory, continued to affect results from Las Vegas, the new sales initiatives we piloted there have shown encouraging results and are being expanded to 10 additional properties around the country,” Gary Loveman, Harrah’s Entertainment chairman, chief executive officer and president, said in a statement.
Net revenue for Harrah's Las Vegas Strip-area properties fell 0.5 percent to $682.8 million, but were down on a same-store basis -- excluding the newly acquired Planet Hollywood resort -- by 4.4 percent.
Harrah's revenue decline on the Las Vegas Strip is in line with preliminary results for the quarter from MGM Mirage, which said revenue per available room on the Strip fell 8 percent year over year to $94.
For Harrah's, MGM Mirage and other Strip operators, increases in visitation to Las Vegas have not kept pace with room additions at CityCenter and other properties.
Harrah's said today: "While hotel occupancy remained strong at approximately 90 percent, 2010 first-quarter revenues declined slightly in the Las Vegas region from the 2009 period due to increased room inventory in the market, weakness in the group travel business, lower spend per visitor and lower average daily room rates." The Las Vegas region includes Bally's, Bill's Gamblin' Hall & Saloon, Caesars Palace, Flamingo, Harrah's, Imperial Palace, Paris Las Vegas, Planet Hollywood and the Rio.
Harrah's did not mention in its earnings report a Bloomberg News story saying the company is interested in selling the Rio, which is separated from the rest of the Las Vegas properties by Interstate 15.
The Las Vegas properties generated EBITDA of $190.9 million in the quarter, down 3.9 percent from the 2009 quarter. EBITDA is a profitability measure meaning earnings before interest, taxes, depreciation and amortization.
Net revenue for Harrah's properties in Laughlin, Reno and Lake Tahoe fell 4.1 percent to $109.9 million while EBITDA dipped 10.1 percent to $18.7 million.
Also during the quarter, the company received consent from holders of $5.551 billion of commercial mortgage backed securities to extend their maturity to 2015 and to give Harrah's the ability to purchase the loans at discounted rates.
This and other financial-engineering deals have left the company "positioned with substantial liquidity and minimal near-term debt maturities and ... better poised to capitalize on an eventual economic rebound and long-term growth opportunities," Loveman said in the statement.
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