he company reported on Tuesday that its first-quarter loss widened to us$ 195.6 million from us$ 132.7 million a year earlier as revenue fell nearly 3 % to us$ 2.19 billion. Hit by the economic downturn, consumers have cut back on discretionary spending like gambling trips at the same time businesses have reduced spending on meetings in Las Vegas.
Harrah's, which was bought by private-equity firms TPG Capital LP and Apollo Management LP in a 2008 us$ 31 billion leveraged buyout, operates more than 50 casinos in six countries, including Las Vegas resorts like Caesars Palace and Paris. "We have entered into an unusual period of stability," Loveman said in an interview on the sidelines of the Milken Institute conference held here, referring to Las Vegas.
He expects little improvement in Sin City this year, noting that some signals for 2011 - such as room rate-boosting group and convention business - are looking positive. The entry of several new casino-hotels on the Las Vegas Strip over the past couple of years - including the December opening of MGM Mirage's 6,000-room CityCenter project - has not helped Vegas operators, and Harrah's has no plans to restart work on a stalled hotel tower at Caesars Palace.
"We are waiting until we think the market can use the incremental supply of high-end rooms," Loveman said. He said Harrah's would consider selling assets that it does not consider central to operations, but declined to comment on which properties fall into that category. "They would be in markets where we have multiple positions ... typically those that generate a weaker performance," Loveman said.
The company, which last year acquired the Planet Hollywood resort on the Strip across the street from CityCenter, is reportedly considering the sale of its Rio All-Suite Hotel & Casino, which is located off the Strip behind Caesars.
Loveman also stressed that Harrah's remains interested in a presence in Asia, including China's Macau, the world's largest source of gambling revenue, but said the company has no immediate plans for the region.
Harrah's, which came close to defaulting on its debt during the peak of the financial crisis last year, has succeeded through a combination of discounted buybacks and sale of new debt to delay payback deadlines. It now faces no major debt maturities before 2015, when us$ 15.5 billion in loans and bonds will come due. "We have five years, which is a long time ... It's not an issue that is at the top of the mind," Loveman said.
Aside from Asia, the CEO said priorities for Harrah's include the potential expansion of gambling in states like Ohio, Massachusetts and Maryland as well as the possible legalization of online poker in the United States. Bills that would allow poker to be played over the Internet have been floated in both the U.S. House and Senate.
Loveman said the legislation has a good chance of success, given that it would raise significant tax revenue, regulate a business that is currently unregulated and create jobs. He said U.S. legalization of online poker - now the domain of offshore companies - would generate billions of dollars in revenue for U.S. operators.
"We would enjoy a substantial portion of that," Loveman said, noting that Harrah's owns the popular World Series of Poker tournament and brand. He said the company's online unit, Harrah's Interactive Entertainment, operates in the United Kingdom and will next launch in Italy and France.