Tilman Fertitta’s pending acquisition of Caesars has been one of the hottest topics since it was announced in May. Don’t get your hopes up about the future of Caesars properties.
Fertitta appears to be a great businessman. That’s good for him, but might not be so good for fans of the businesses he buys.
According to Bloomberg, he’s worth $13.4 billion. His number one income source is surprisingly his stake in Wynn Resorts, followed by a stake in DraftKings.
Most of us know him from owning Fertitta Entertainment, which owns the Golden Nugget casino chain, Landry’s restaurants, and the Houston Rockets NBA team. Caesars will be part of this company.
Social media is full of people hoping the new owner of Caesars will make massive improvements and right the wrongs of the previous regime after the deal clears.
I thought I had a pretty good grasp of how Fertitta operates. He finds distressed assets, like Caesars, streamlines back-of-house operations, standardizes the customer experience, and starts making money.
This LinkedIn article about Fertitta about removing Cajun spices from his restaurants came up often while doing research. It and other sources confirmed what I read and touched on small details that never reached me.
Removing something as small as a spice from his restaurants stands out as both brilliant and devious, and the perfect encapsulation of what I expect from Caesars in the future.
He removes the least profitable parts of a business, no matter how big or small. He’s a person who can look beyond personal preference and just focus on being profitable. I respect that as a business person, and would hate it as a customer.
What’s the Cajun spice of Caesars? There are probably numerous options; otherwise, he wouldn’t be in the process of acquiring the company.
The current executive team has mostly sucked the soul from many of the casinos over the past eight years. Whether it’s the same boring hotel room design with different accent colors, the same celebrity chef restaurants, or the underwhelming gambling rules, the properties aren’t unique or special.
There’s probably more soul-sucking left. While Fertitta won’t destroy the businesses, his track record says he’ll trim all the fat from spices to executives.
Expect To Be The Fat Being Trimmed
He doesn’t force his Landry’s restaurants into all of the casinos, but he does add them when possible. There will likely be some streamlining of the current celebrity chef restaurants that underperform.
Yeah, yeah, we don’t need another Guy Fieri joint, but will his casual restaurant replacements be any better? That’s debatable. Also, he’ll likely keep whichever brands are most profitable, so Fieri’s relationship might continue. You might be surprised by how difficult it is to find public information on celebrity-chef restaurant revenue.
Landry’s doesn’t have celebrity chef restaurants because they’re typically more expensive. Moreover, Fertitta can’t standardize operations to reduce expenses.
Without knowing the finances, I think the company will keep Ramsay restaurants, wind down some Giada and Flay spots, and completely move on from others.
Don’t expect to see improvements or unique qualities at Caesars casinos. Standardizing operations and experiences homogenizes what guests will see and feel.
How Will Rewards Be Impacted?
The TravelZork community is a group of some of the sharpest minds in maximizing casino and travel rewards. That’s a great thing in general, but you’re also the least profitable guests, and casinos are not fond of that.
I’m different from some of the members I know in the community. I have certain casino, hotel, and restaurant preferences and try to maximize rewards from those outlets. I feel like I’m in the minority because more than too many members just want free or cheap and don’t care much about the outlet.
Neither approach is wrong; it’s just a preference.
Fertitta Entertainment operates similarly to Caesars. Its Rewards program is the cornerstone that links its casinos, restaurants, and entertainment venues.
Caesars Fertitta Palace Rewards will have a massive list of outlets for members to earn and use rewards. They’re likely fine for most Caesars customers. These are good American brands.
Much like Caesars as a casino brand, the dining outlets are mid at best to me. The “fine dining” restaurants are the kind of fine dining restaurants you can wear shorts in. That’s not really fine dining, but that is the Caesars customer in a nutshell.
The answers to my question were not positive, but Claude tried for a positive spin:
“The headline upside is the loyalty network expansion, but the real question is whether Fertitta treats Rewards as a competitive asset or just a marketing bullet point while he focuses on debt management.”
Don’t expect:
- Fee reductions: You don’t make more money by taking less.
- Better comp offers: You don’t make money by giving more freebies.
- Improved comp cocktails while gambling: Caesars casino cocktails are already putrid, and reducing quality would be worse.
- Status matching: Earn your status or go away. You have to pay to ride this train!
- Better gambling rules and odds: Why leave money on the table?
If there’s a potential upside, it’s that Caesars will be going private when the deal is done. Not having to report quarterly earnings could allow him to spend more on the best rewards members since increasing profit right away isn’t as important.
This could lead to a better long-term relationship for all parties. I wouldn’t hold my breath, but it’s possible.
Gutting an already gutted company sounds like a miserable experience. I gave up on Caesars a long time ago, and I don’t expect Fertitta to improve the experience based on the research I’ve done over the past few weeks.
I’d like to be proven wrong because so many people I know are happily part of this ecosystem.
Vanderpump Hotel Grand Opening!
Last night I went to the grand opening of Vanderpump Hotel. I’m not familiar with anyone from the shows besides the namesake of the hotel.
I didn’t stay overnight; in fact, I bailed before the party. I was reminded that I don’t like crowded spaces and left after Lisa Vanderpump addressed the media and fans.
I’m not a fan of visiting casinos under construction, so I stayed away from the transition from The Cromwell. My quick takeaway is that the casino floor looks and feels like a lavender post-COVID Cromwell. I shared my thoughts on the property from when I said goodbye to The Cromwell.
The gaming conditions are standard Caesars rules and odds. I’m sharing here because I’m curious to see the future of the property after Fertitta’s acquisition is completed. He should have a year of revenue to track to make an informed decision.
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Marc grew up on the mean streets of the South Bronx. He's the rare combination of Yankees and Jets fan which explains his often contrarian point of view. He learned about gambling at a young age working down the street from a bookie who took action on anything from the mainstream sports to the last three digits of the purse for certain horse races. Yeah, that's a thing. Today Marc is a freelance writer and social media consultant which allows him to work anywhere there's a wifi signal. This allows him to work from the sportsbook at Red Rock Resort or the food court at The Venetian where you’ll find fast and free wifi. Writing about steak, booze, gambling and Las Vegas is a tough job but somebody has to do it.