Friday, February 05, 2016

Tropicana to Improve Anemic Results

New Tropicana owners Penn National Gaming reported their fourth quarter 2015 earnings yesterday. During the earnings conference call several minutes were devoted to talking about Tropicana and what the company will be doing to improve "anemic" gaming results at the property.

Several of the initiatives revolve around bringing Penn's regional gambling customers to Las Vegas and having them stay at play at Tropicana. In an era where other companies are forgetting about gamblers, it seems like Penn National knows where its bread is buttered and is ready to welcome gamblers into their newly acquired property.

Penn National COO Jay Snowden talked about Tropicana on the earnings conference call:

"We made significant progress on continuing to improve the overall gaming experience by upgrading the slot and table game offerings at Tropicana Las Vegas in the fourth quarter. We continue to right-size the cost structure of course, and prepare for our second quarter launch of the Marquee Rewards program at Tropicana Las Vegas. So, I don't think it's a surprise to anyone - our current gaming business volumes are still anemic at this point but we anticipate some real acceleration in the second half of the year once our regional database customers start to fill those hotel rooms."

"Now conversely the non-gaming trends at the Tropicana like the rest of the Strip operators in the fourth quarter were very strong. We're forecasting some strength year-over-year in our group convention business. Occupancy rates, ADR all look encouraging in the first quarter of 2016 as well - so no doubt we're benefiting from the rising tide effect in Las Vegas until we get everything else where it needs to be from an offering perspective at Tropicana."

"When we acquired this property close to 50% of the business was coming from wholesale or online travel agency bookings - that's down now closer to 40%. We envision taking that down to as close to zero as we can. 10-15% is probably the sweet spot for some weekday softness periods, but we're going to be looking to move that business aside as we bring our database customers in and still have plenty of room for the other 50% plus of the rooms to go towards strong cash ADR's of group business, convention business, transient customers. That's what we're seeing strength in right now - we've got plenty of rooms to accommodate those customers as well as our gaming customers."