In March, the casinos in Las Vegas as well as all of Nevada shut down due to the coronavirus pandemic. The same can be said for casinos around the United States as well as around the world. The virus hit hard and fast, with non-essential businesses shutting down to try and slow the spread. As of now, most casinos have opened back up, but Caesars Entertainment Inc. decided to wait on reopening the Rio All-Suite Hotel and Casino. The venue has been shut down for almost seven months and now it seems Caesars feels it is ready to get back to work.
The Rio All-Suite Hotel and Casino is a popular spot for gamblers, particularly during the annual World Series of Poker. The WSOP did not take place this year along with any casino gaming at the site as the virus was still problematic at the time.
For Caesars, they were picky about which venues they reopened for a number of reasons. First, the casinos had to follow strict protocols in order to offer operations. This costs money. Caesars choose to open the venues that would fare better first, so they could try and make up lost revenues before opening other venues.
During a recent Q3 earnings conference call, CEO of Caesars Tom Reeg, stated that the Rio will reopen by the end of the year. The casino was sold by Caesars to a company associated with Dreamscape Companies. The deal came in at $516.3 million. A lease agreement was then signed between new owner and Caesars, with the casino continuing to operate the venue for two years. Annual rent is being paid by Caesars of $45 million to do so.
The new owner has the option to pay $7 million to Caesars if they want to extend the lease agreement for a third year. It is unclear as to if the deal will be extended.
On the call, Reeg also said that the performance of Caesars Entertainment is improving. While other companies have decided to cut operations due to low performance, Caesars is plugging away. They have no plans to cut their services as of right now.
Reeg stated that Caesars wants to open properties so that business can get stronger. The company is hoping they can improve its financial levels in the next few months. The CEO said he feels the company will generate close to $50 million in October in EBITDAR. This will be much higher than the $10 million generated in July.
Caesars feels the second half of next year will help the brand to see more revenue earnings. The Caesars Forum opened in March and cost $375 million to open. However, the facility was unable to offer any convention services due to the coronavirus pandemic. Events should start again soon which will help Caesars to offer convention options.
Having a higher capacity option will also help Caesars and other brands gain ground with revenues. It is expected that Governor Steve Sisolak will allow capacity to increase to 50% which will be helpful to all operators.