Caesars Leads Drop in Casinos on Room Rate Pressure in Vegas
(Bloomberg) -- Caesars Entertainment Corp. led casino stocks lower, posting the largest drop since a 2017 debt restructuring after warning that tough conditions in Las Vegas will mean little or no growth in hotel revenue this quarter.
Fewer big events and pressure on room rates for leisure travelers are putting a damper on the outlook, Caesars executives said Wednesday on an earnings call. Competition in Atlantic City, New Jersey, is also heating up, the company said. Room revenue will be flat to ahead 2 percent this period, they said.
“The main issue that we saw in the third quarter was really in the first two months of the quarter,” Chief Executive Officer Mark Frissora said on the call. “We don't see that occurring in the fourth quarter and the programming for the city appears to be much stronger.”
Shares of Las Vegas-based Caesars, the biggest U.S. owner of casinos, fell as much as 24 percent to $8.55 in New York before recovering somewhat. MGM Resorts International, the biggest owner on the Las Vegas Strip, lost as much as 8.6 percent.
Slower growth in Macau is also weighing other casino stocks. Caesars doesn't operate there.
July casino revenue in that Chinese gambling enclave, the world's largest casino market, increased 10 percent in July from a year earlier, trailing the 11.5 percent growth seen by analysts in a Bloomberg survey.
Las Vegas Sands Corp., the world's largest casino company, fell as much as 4.1 percent in New York. The resort owner generated almost 60 percent of its revenue in Macau last year.
Wynn Resorts Ltd., which did almost 75 percent of its business in Macau last year, is scheduled to report financial results Wednesday after markets close. The stock fell as much as 4.9 percent to $158.60 in New York
To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum
©2018 Bloomberg L.P.
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