Casino and hospitality giant Caesars Entertainment has reported its financial results for the first quarter of the year. For the period ended March 31, the business posted net revenues of $2.3 billion, up from $1.8 billion for the comparable prior-year period, although it faced marked losses within its digital segment. Additionally, plans to sell a Strip property were unveiled.
Despite the revenue increase, a net loss widened to $680 million from $423 million versus the prior-year period. Same-store Adjusted EBITDA was also down to $296 million from $521 million in Q1 2021. Operating expenses increased 46.1% to $2.3 billion during the period, driven by an 81.3% year-on-year increase in casino and pari-mutuel commissions to $1 billion.
"Our first-quarter operating results reflect sequential improvement each month of the quarter in revenues and EBITDA,” said Tom Reeg, CEO, in a written statement. “Our Las Vegas segment posted an all-time first-quarter EBITDA record and our regional segment delivered solid EBITDA and margin growth. Consumer trends remain healthy and we are optimistic for the balance of the year."
Las Vegas revenue increased by 83.9% to $914 million, up from $497 million in Q1 2021. Meanwhile, regional operations saw net revenues of $1.4 billion, up 13.5% from $1.2 billion last year. However, the company saw negative revenue of $53 million in its Caesars Digital segment, down from $39 million in revenue in the comparable period last year.
Hotel occupancy consistently grew in the Las Vegas segment, with travel rebounding after a surge in Omicron cases at the start of the year. Occupancy levels were 75% in January, 81% in February and a high 91% in March. The trend is continuing: Reeg told investors April was the single-largest month for cash room revenue in the company's history, and occupancy was at 97%.
In terms of net income per segment, Las Vegas bounced back from a $67 million loss last year to a $168 million net profit. Regional operations delivered $124 million net income, almost double from $65 million in Q1, while both Caesars Digital and managed and branded services posted losses: $576 million and $211 million. A loss in corporate and others was reduced by 56.8% to $185 million.
Tom Reeg, CEO Caesars.
Reeg addressed the digital business performance in a call with investors, and said Caesars has already taken measures to lower costs in marketing and advertising. Spending has been reduced by about $250 million, according to the chief executive, and the company has seen “no degradation in the sports betting handle share” despite this decision.
“Of the $553 million of EBITDA loss in the quarter, a little over $400 million is attributable to the launches in New York and Louisiana, with New York being the lion’s share of that,” Reeg said. “We cut about a little over a quarter of a billion dollars of expected spend from when we started cutting in February.”
The executive further explained losses began to reduce by the end of the quarter, as the measures were already in place: digital EBITDA loss for March was at $44 million, indicating a normalization of business following the heavy-spending launch period. Going forward, the plan is to focus on the most valuable guests, and “not waste money on the unprofitable players.”
Company officials also discussed the sale of a Strip casino, although the specific property was not named. The move was also brought up in February, but now Reeg provided an update, stating a definitive agreement is expected to be reached by the middle of the summer.
“You shouldn’t expect us to give you a play-by-play,” Reeg told investors Tuesday, according to Las Vegas Review-Journal. “Know that it is in motion and governed by the documents that govern our Vici agreement.”
Securities filings show Vici Holdings has the right of first refusal on the first two Strip properties Caesars intends to sell. The first asset subject to the agreement would be from a group that includes Flamingo, Paris Las Vegas, Planet Hollywood Resort and Bally’s.