Caesars Entertainment Corp. said that we expect to compensate $ 80 million in increased wage costs this year with recently announced business offenses and fewer missions.
The resort's operator last month announced that it would reduce annual labor costs by $ 40 million after eliminating some business positions such as finance, legal and marketing roles. In a revenue interview on Wednesday, it said it could reduce costs this year even further.
"Through the combination of this (corporate cut) effort along with further efficiency gains across both the marketing and labor for the whole year, we expect to be able to successfully offset $ 80 million in annual wages and now Expect increasing margins on a full-year basis, says CFO Eric Hession to Wall Street analysts.
Strip operators are facing increasing costs as revenue growth remains lukewarm and pushes them to seek new ways to increase deficits and profit margins.
MGM Resorts International announced early This week, it will have eliminated 1
Last year, Caesars and MGM entered into a new five-year contract with Culinary Culinary Association Local 226, which includes compensation increases, Hession said the emperors also see labor cost pressures in the Midwest region due to a tight labor market. US unemployment is almost 50 years old.
"A large part is primarily due to a shortage of labor – or have difficulties finding good talent in many of these markets – and as a result it creates the price of labor," he says.
The finance director said that the company will Continue to improve marketing costs – such as competing rooms and food – through better technology, however, the marketing gains will be lower than in previous years, he added.
"We always try to improve the way we can market to our customers. We changed quite dramatically the amount we returned to our customers, he said.
150,000 more rooms nights
Hession said the company's second-quarter non-group booking is about 150,000 rooms nights than at this same time last year. The higher hotel bookings will lead to higher food, drink and game revenue, he said.
Last year, Caesars began to aggressively market its Las Vegas rooms for recreational guests following a weak convention and entertainment calendar in the third quarter which resulted in a sharp decline in revenue.
Hession said these efforts have paid off in the first two quarters of 2019 and expect the company to continue pursuing that strategy for the rest of the year.
However, Hession said that Caesars is not increasing its 2019 Las Vegas revenue growth forecast of 2.5 percent.
Higher occupancy along with a better gaming team percentage helped Caesars increase its Las Vegas net sales 5.8 percent in the first quarter, the company said earlier on Wednesday.
Caesars said Las Vegas net sales increased to $ 953 million compared to $ 903 million in the same period last year. Its Las Vegas hotel load increased by 250 basis points to 95 percent, while vacancy rates increased by 4.9 percent. The higher team percentage represented about half of Las Vegas net gains.
Las Vegas cash flow jumped 12 percent to $ 360 million compared to $ 321 million in the same quarter last year.
The resort's operating revenue also increased when the acquisition of Centaur compensated for tougher competition in Atlantic City and temporary closure of Midwest casinos due to bad weather.
Caesar's net sales increased by 7.3 percent to $ 2.12 billion. However, the company's quarterly losses were expanded to $ 217 million from $ 34 million in the first quarter of last year. The larger quarterly loss was driven by a $ 322 million change in the fair value of a derivative collateral.
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