by Tom Bastek
Last updated: 12:00 PM ET, Thu January 15, 2015
As TravelPulse reported earlier, the operating unit of Caesars Entertainment Corp, which just happens to be the largest casino company in the country, filed for Chapter 11 Bankruptcy. According to the report, much of the debt is from the $30 billion dollar buyout of Harrah's Entertainment back in 2008. This is what will come of it.
The Properties
This is the best part about bankruptcy; almost nothing changes in the business. Caesars won't close any of their resorts, wont lay off a bunch of employees, and the day-to-day business will stay exactly the same. Takeovers, buy-outs and foreclosures happen all the time in Las Vegas and no one on the casino floor normally feels the difference.
Occasionally, you will see a casino use a transaction as an excuse to void a union contract (although now most of those are bulletproof), layoff lazy or ineffective non-union and management employees, or reorganize something employee-related that they were trying to do anyway.
"Why did we lose the salad bar in the employee dining room? Haven't you heard? It's the bankruptcy." Nothing revs up the rumor mill in the employee dining room more than a major transaction and in the end, nothing really comes of it.
The Guests
This story isn't even a day old and there are already comments about, "Well, I guess we won't be gambling at Caesars next time to Vegas." In the words of Green Bay Packers quarterback Aaron Rodgers this past September, "I have five letters for you: R-E-L-A-X."
There is absolutely nothing to worry about from the consumer's side of things. The casino is not suddenly going to tighten up all the machines on the casino floor. Caesars wants to drive more business to the resorts. The last thing they want to do is raise the rates in the hotels which will turn away more guests.
Actually, now that the resorts have cut their debt by 90 percent, you might actually see more money being pushed into promotions which in turn could actually push rates down. Not quite sure if they would want to market it that way, but it is a possibility. Speaking of marketing…
Who this Does Affect?
The marketing departments across the board have a huge task at hand. With the media making a big deal about the bankruptcy and all of the people making unqualified comments about the situation, this is a wave they need to be ahead of. The marketing departments need to find a way to reassure their guests that the player points they have earned aren't going anywhere, the odds are the same at the gaming machines on the floor as before, the room rates aren't going up and the crab legs aren't coming off the all-you-can-eat buffet.
To be totally honest here, it is tough to avoid a Caesars property anyway. They have eight properties in Las Vegas, eight Horseshoe properties, 16 Harrah's properties, and 19 other properties across the country and around the world. Good luck knowing you are even in a Caesars property.
The big losers here are the smaller note holders of Caesars debt. They will probably get back 10 percent or less of what they are owed. So your big casino, which gets to keep its doors open, its guests happy, and its coffers full, basically just writes off the debt and goes back about their business. And the smaller note holders just have to take it.
If anyone should stop gambling at the Caesars properties, it's these guys. Although, when you are funding a gaming corporation, you are already taking a big gamble. It's just in this case; the house was the big winner. You already knew that, though.
Because in Vegas, the house always wins.
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