Harrah’s Entertainment is reportedly hunting for new properties, including Argosy Gaming. But, for now, the company is doing just fine, thank you, says chief executive officer Gary Loveman.
"The demand for gaming entertainment vastly exceeds supply. And Harrah’s is in the best position to benefit from expansion,’’ he told a JP Morgan Gaming and Lodging Conference late last month.
Amid the Iraqi war and attendant market jitters, Loveman said Harrah’s is well-equipped to weather the storms. He cited several statistics to support his optimism:
”¡ The company has enjoyed same-store sales growth in every quarter of the past four years.
”¡ In a soft 2002, Harrah’s earnings jumped 34 percent to a record $2.99 per share.
”¡ Return on investment hit 8 percent, the highest in the industry.
”¡ Harrah’s Las Vegas casinos posted 8 percent gains in gross gaming revenue while competitors declined 1 percent.
”¡ Revenues at its Atlantic City properties jumped 25 percent after a May expansion vs. a modest 5 percent gain by rival resorts.
Loveman credited several strategies for the bullish performance.
"The Total Rewards program continues to be a great success with its targeted segments,’’ he said. Added retail partners, currency value given to reward credits and tiered benefits were cited as key components that elevate Harrah’s player programs.
With cross-market play topping $1 billion last year, Harrah’s benefits perhaps more than any other casino company from geographic diversity, analysts say. Loveman also lauded the company’s sophisticated database for driving what he calls "leading-edge capability.’’
The company has also aggressively cut costs by reducing employee turnover. Attrition rates declined from 31 percent in 2001 to 24 percent last year.
Whether Harrah’s sticks with its "organic growth strategy" of boosting same-store sales or expands through acquisition remains an open question. Some industry observers say privately that the company is likely to pursue both avenues.
But whatever happens, analysts like what they’ve seen so far. Barron’s, the respected financial publication, rated Harrah’s the No. 1 gaming company in its ranking of 500 corporations in a tough 2002. And the early line suggests a repeat performance this year.