Christopher Palmeri
Caesars Entertainment Corp. hired two executives to help expand beyond gambling, including licensing the Caesars and Harrah’s brands to hotels that may not feature casinos.
As Caesars’ biggest division emerges from bankruptcy protection, a number of potential investors have expressed interest in building resorts flying the company’s flags, in the U.S. and abroad, Chief Executive Officer Mark Frissora said in an interview. Caesars’ customer loyalty program, with some 50 million members, is an attractive asset that lodging operators could use to market their properties, he said.
“There’s a lot of good money out there, developers that would love to have these brands, because they’re unique in the marketplace,” he said.
Marco Roca, a veteran of Wyndham Worldwide Corp. and Starwood Hotels & Resorts, will join Caesars as president of global development, the company said in a statement last week. Michael Daly, who worked for 15 years at General Electric Co., will serve as senior vice president for strategy and mergers and acquisitions.
With revenue in the USD38.5 billion casino industry climbing only modestly in the U.S., many operators are looking beyond gambling to spur growth, building sports and entertainment venues, buying social gaming companies and sprucing up their hotel offerings. And Frissora is looking for ways to give Caesars some momentum as a protracted bankruptcy process comes to a close.
The company, which was taken private by the investment firms Apollo Global Management LLC and TPG Capital for about $30 billion in 2008, has struggled since then under a mountain of debt. Following extensive negotiations with creditors, the company expects its largest unit, Caesars Entertainment Operating Co., to exit bankruptcy by September. Frissora, the former CEO of rental-car company Hertz Global Holdings Inc., joined in 2015.
Las Vegas-based Caesars is chasing opportunities in Japan, Canada, Australia, Brazil and Dubai, Frissora said. A planned casino in South Korea catering only to foreigners is still on track, he said, despite a Chinese restriction on travel to the country due to Seoul’s deployment of an antimissile system.
Japan legalized casino gambling last year but is still working on the details of where and how many to authorize. Caesars is looking to spend much less than the $10 billion number cited by competitors including Las Vegas Sands Corp. and MGM Resorts International, Frissora said. He said officials in Japan have told him that Caesars’ lack of a casino operation in the the Chinese enclave of Macau is a strength because the region is often associated with money laundering and other unsavory practices.
The company is also looking to acquire casinos operating in Colorado, the northeastern U.S. and any market where the company already competes but isn’t No. 1, he said.
Development plans are under way in Las Vegas, where the company is building a 300,000-square-foot convention center behind its Bally’s casino, with plans to offer space for smaller meetings than the big trade shows at the Las Vegas Convention Center. Business travelers on expense accounts spend as much as $150 more a night on food than leisure guests do, Frissora said.
Caesars adjusted its customer loyalty program last year to give more points to non-casino spending than betting, underscoring the growing importance of the business. Points in the company’s Total Rewards program can be exchanged for free meals, rooms and even a cruise in a partnership with Norwegian Cruise Line Holdings Ltd.
Other casino operators have explored non-gambling properties. MGM has developed non-casino hotels domestically and overseas with its MGM Grand brand. Wynn Resorts Ltd. plans a resort behind its flagship Las Vegas property that won’t initially include a casino.
In a deal negotiated with creditors, Caesars’ lenders and independent directors will gain the majority of the seats on a newly restructured board. Among directors leaving the board in September are Chairman Gary Loveman and TPG co-founder David Bonderman, moves that were disclosed in a June 5 filing. Bonderman was also on the board of Uber Technologies Inc. until June 13, when he made an inappropriate joke about women at an internal meeting and quickly resigned. Bloomberg
