Harrah’s sees revenue take hit on economic weakness

By Steve Green

Monday, April 27, 2009 | 9:22 p.m.

Harrah's Entertainment Inc., the world's largest casino operator, late Monday reported first-quarter financial results that showed continued declines in revenue for its big Las Vegas resorts that have been hit hard by the recession.

Harrah's said that overall, revenue fell 13.3 percent to $2.254 billion in the first quarter, compared to the first quarter of 2008. The company's loss from continuing operations narrowed, from $275 million in the 2008 quarter to $127.4 million in the 2009 quarter.

Cash flow -- or earnings before interest, taxes, depreciation and amortization -- on a property level fell 13.7 percent to $561.3 million.

In Las Vegas, revenue tumbled 20.5 percent to $686.4 million and cash flow fell 27.9 percent to $198.6 million. Harrah's Las Vegas properties include Caesars Palace, the Rio, Paris, Bally's, the Flamingo, Bill's Gambling Hall, Harrah's and the Imperial Palace.

"While hotel occupancy was strong at over 90 percent, first-quarter revenues and income from operations in the Las Vegas Region were lower than in the 2008 first quarter due to lower spend per visitor and weakness in the group-travel business, which led to lower average daily room rates. Cost-reduction efforts helped partially offset the impact of these factors on property EBITDA (cash flow)," according to a company statement.

"Our first-quarter results continued to be impacted by the economic slump that has reduced consumer spending, but the improvement in our operating margins over those of the past few quarters indicates our expense-reduction efforts are paying off," said Gary Loveman, Harrah’s chairman, president and chief executive officer.

Elsewhere, revenue was off 15 percent in Atlantic City, down 12.1 percent in Louisiana and Mississippi, down 2.6 percent in Iowa and Missouri, up 3.3 percent in Illinois and Indiana and down 21.8 percent for Nevada casinos outside of Las Vegas in such markets as Lake Tahoe, Reno and Laughlin.

During the quarter, Harrah's completed debt exchanges that reduced debt by $1.8 billion and annual interest expenses by $73 million at Harrah's Operating Company; and overall for Harrah's Entertainment that cut debt by $2.3 billion and reduced yearly interest costs by $104 million.

"The reduction of our overall debt and reduction of our interest expense resulting from exchange offers completed this month and at the end of last year were also important developments," Loveman said.