Circus circus enterprises


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Circus circus enterprises

  1. 1. -MADHULIKA(4109026026)
  2. 2. <ul><li>Purchased in 1974 for $50,000 as a small & unprofitable casino operation. </li></ul><ul><li>By William.G.Bennett & William N. Pennington. </li></ul><ul><li>Rejuvenate Circus :- fresh marketing. </li></ul><ul><li>Went public with a stock offering in Oct 1983, & experiences rapid growth & high profitability over time. </li></ul><ul><li>Business of entertainment. </li></ul><ul><li>Innovators in the theme-resort concept popular in casino gaming. </li></ul>
  3. 3. <ul><li>Its areas of operations are Las Vegas, Reno, and Laughlin & Nevada as well as other locations in the U.S. and abroad </li></ul><ul><li>It operates 9 properties in Las Vegas, 10 properties in Nevada, 1 in Mississippi & has 50% ownership in other 3. </li></ul>
  4. 4. <ul><li>Circus Circus -Las Vegas:- </li></ul><ul><ul><ul><li>69 acres land </li></ul></ul></ul><ul><ul><ul><li>3744 hotel rooms. </li></ul></ul></ul><ul><ul><ul><li>1,09,000 sq ft casino space. </li></ul></ul></ul><ul><ul><ul><li>Shopping areas. </li></ul></ul></ul><ul><ul><ul><li>2 specialty restaurant. </li></ul></ul></ul><ul><ul><ul><li>Fast food shops </li></ul></ul></ul><ul><ul><ul><li>Cocktail lounges. </li></ul></ul></ul><ul><ul><li>In 1997 - $126.7 million was invested – remodeling. </li></ul></ul><ul><ul><li>In 1998 - $35.2 million. </li></ul></ul>
  5. 5. <ul><li>Luxor – 1993. </li></ul><ul><ul><ul><li>Egyptian themed hotel – casino complex. </li></ul></ul></ul><ul><ul><ul><li>30 story pyramid. </li></ul></ul></ul><ul><ul><ul><li>Two new 22-story hotel towers. </li></ul></ul></ul><ul><ul><ul><li>1,20,000 sq ft casino in hotel atrium. </li></ul></ul></ul><ul><ul><li>In 1997 – went major renovations – costing $323.3 million. </li></ul></ul><ul><ul><li>In 1998 - $116.5 million. </li></ul></ul><ul><ul><ul><li>4425 rooms – renovated casino space. </li></ul></ul></ul><ul><ul><ul><li>A series of IMAX attractions- 5 theme restaurants. </li></ul></ul></ul>
  6. 6. <ul><li>Excalibur – 1990. </li></ul><ul><ul><ul><li>28-story hotel towers – 4008 rooms. </li></ul></ul></ul><ul><ul><ul><li>1,10,000 sq ft casino. </li></ul></ul></ul><ul><ul><ul><li>12 restaurants </li></ul></ul></ul><ul><ul><ul><li>1000-seat amphitheatre. </li></ul></ul></ul><ul><ul><li>In 1997 – underwent renovations - $25.1 million. </li></ul></ul><ul><li>The silver city casino & Slota-A-Fun combinedly offer 34,900 sq ft of casino floor. </li></ul>
  7. 7. <ul><li>All circus’s operations do well in city of las Vegas. </li></ul><ul><li>In 1997- operational earnings for Luxor & Circus Circus -Las Vegas were off 38% from previous year. </li></ul><ul><li>Due to disruption in services because of renovations. </li></ul><ul><li>Hotel room occupancy remained above 90% - low room rates. </li></ul>
  8. 8. <ul><li>Circus Circus – Reno:- </li></ul><ul><ul><ul><li>1605 hotel rooms – 60,600 sq ft of casino. </li></ul></ul></ul><ul><ul><ul><li>Video arcades </li></ul></ul></ul><ul><ul><ul><li>Midway games & circus acts. </li></ul></ul></ul><ul><ul><ul><li>Cocktail lounges. </li></ul></ul></ul><ul><ul><li>Remodeling - $25.6 million. </li></ul></ul><ul><li>In1987 – The Colorado Belle – 63000 sq ft casino. </li></ul><ul><li>In 1983 – The Edgewat er – 57000 sq ft casino. </li></ul><ul><li>Combined, these two properties, contain 2700 rooms & over 1,20,000 sq ft of casino. </li></ul>
  9. 9. <ul><li>In Las Vegas – Mirage Resorts – to build Monte Carlo, a hotel-casino </li></ul><ul><ul><li>3002 hotel rooms </li></ul></ul><ul><ul><li>90,000 sq.ft. casino. </li></ul></ul><ul><li>In Elgin, Illnois, - 50 % partnership - Hyatt Development Corporation in The Great Victoria </li></ul><ul><ul><li>styled to resemble a Victorian riverboat. </li></ul></ul><ul><ul><li>36,000 sq. ft casino space. </li></ul></ul><ul><li>50 % partnership with Eldorado Limited in Silver Legacy. </li></ul><ul><ul><li>1711 hotel rooms. </li></ul></ul><ul><ul><li>85000 sq.ft of casino space. </li></ul></ul>
  10. 10. <ul><li>Strategies:- </li></ul><ul><ul><li>Aggressive growth strategies. </li></ul></ul><ul><ul><li>Corporate structure – designed to enhance the growth. </li></ul></ul><ul><ul><li>A strong cash position – innovative ideas – cost control. </li></ul></ul><ul><ul><li>Competitive Edge - Invested heavily in renovation of existing properties. </li></ul></ul>
  11. 11. <ul><li>3 new projects:- </li></ul><ul><li>Mandalay Bay :- $950 million. </li></ul><ul><ul><li>43 story hotel – casino with over 3700 rooms – 11 acre aquatic environment. </li></ul></ul><ul><li>In Detroit, Michigan, Circus has combined with Atwater Casino Group in a JV to build a $600 million project. </li></ul><ul><li>Planning to construct a casino resort along the Mississippi Gulf - $225 million. </li></ul><ul><li>In Atlantic city, Circus has entered into agreement with Mirage Resorts to develop a 181-acre site in the Marina district. </li></ul>
  12. 12. <ul><li>In 1997 – Gaming industry captured a large amount of dollars spent in U.S. </li></ul><ul><li>Gamblers lost $44.3 billion. </li></ul><ul><li>Casino gambling accounts for 76% of all legal gambling expenditures. </li></ul><ul><li>Las Vegas – largest U.S gaming market – largest conventional market – more than 1,00,000 hotel rooms. </li></ul><ul><li>Las Vegas attracts overnight resort-seeking vacationers. </li></ul><ul><li>Atlantic city attracts day trippers. </li></ul>
  13. 13. Revenues(1997) Income(1997) Revenues(1996) Net Income(1996 Starwood/ITT $6597 $249 Hilton hotels 5316 250 3940 82 Harrah’s Entertainment 1619 99.3 1586 98.9 Mirage resorts 1546 207 1358 206 Circus Circus 1354 89.9 1247 100.7
  14. 14. <ul><li>In Las Vegas, Nevada, gambling operations are subject to regulatory control by the </li></ul><ul><ul><li>Nevada State Gambling Control Board, </li></ul></ul><ul><ul><li>the Clark Country Nevada Gaming & Liquor Licensing Board, and </li></ul></ul><ul><ul><li>City government regulations . </li></ul></ul><ul><li>The laws, regulations & supervisory procedure are based on public policy concerned with prevention of unsuitable persons from having direct or indirect involvement with gaming at any time. </li></ul>
  15. 15. <ul><li>Core Competency is casino gaming. </li></ul><ul><li>Need to focus its efforts in Las Vegas, Atlantic City and Mississippi. </li></ul><ul><li>For years, analysts have questioned the ability of gaming industry to continue high growth as industry matures. </li></ul><ul><li>Circus enterprise faces the risk of maintaining high growth in mature industry. </li></ul>
  16. 16. <ul><li>Increasing competition. </li></ul><ul><li>Decrease in Net Income. </li></ul>
  17. 17. <ul><li>In 1974- Purchased by Bennet and Penington – Casino gaming. </li></ul><ul><li>In 1979 - Circus Circus purchased Slots-A-Fun. </li></ul><ul><li>In 1982 – remodeled Circus Circus. </li></ul><ul><li>In 1983 – went public - 0ffering four million shares on the New York Stock Exchange. </li></ul><ul><li>In 1983 - extended the operations in Nevada, purchasing the Edgewater Hotel and Casino on the Colorado River in Laughlin, Nevada. </li></ul>
  18. 18. <ul><li>In 1984 - purchased the Colorado Belle Casino - $4 million. </li></ul><ul><li>In 1985 - expanded the Reno facilities - constructing a 29-story hotel tower, called Circus Skyrise. </li></ul><ul><li>In 1990 – opened Excalibur. </li></ul><ul><li>In 1991 - earned $84.3 million on sales of nearly $620 million. </li></ul><ul><li>In 1993 – opened Grand Slam Canyon – amusement park. </li></ul>
  19. 19. <ul><li>In 1995 - Acquisition of privately held Gold Strike Resorts Inc. - $500 million </li></ul><ul><li>In 1999 -  $950 million upscale Mandalay Bay resort opens on the Strip; company changes its name to Mandalay Resort Group. </li></ul>
  20. 20. <ul><li>To become the first of a new generation of casino operators who saw their business not as an offshoot of a slightly shady underworld practice, but as an entertainment franchise designed to attract people of all income levels and all ages. </li></ul><ul><li>Circus Circus Enterprises, Inc. is in the business of entertainment, with its core strength in casino gaming. </li></ul>
  21. 21. <ul><li>Provide customers with entertainment that is pure play and fun. </li></ul><ul><li>Emphasize quality. </li></ul><ul><li>Look for innovations to improve customers' experience. </li></ul><ul><li>Commit to being a leader. </li></ul><ul><li>Attract family vacationers with fun for parents and children. </li></ul><ul><li>In the initial phase, company used to focus on “low roller”. </li></ul><ul><li>Later, it started focusing on “middle roller”. </li></ul>
  22. 22. <ul><li>Strength :- </li></ul><ul><ul><li>Strong financial position </li></ul></ul><ul><ul><li>Innovative product & Marketing </li></ul></ul><ul><ul><li>Experienced management team. </li></ul></ul><ul><ul><li>Theme resort concept. </li></ul></ul><ul><li>Weakness:- </li></ul><ul><ul><li>Financial Performance. </li></ul></ul><ul><ul><li>Ability to compete in the fast changing Las Vegas market. </li></ul></ul>
  23. 23. <ul><li>Opportunities:- </li></ul><ul><ul><li>Expansion/Diversification </li></ul></ul><ul><ul><li>Theme park development. </li></ul></ul><ul><ul><li>Circus has traditionally attempted to attract the &quot;low roller”. It has also ability to attract “high roller”. </li></ul></ul><ul><li>Threats:- </li></ul><ul><ul><li>Increasing competition </li></ul></ul><ul><ul><li>Economic cycle sensitivity. </li></ul></ul>
  24. 24. <ul><li>Political:- </li></ul><ul><ul><li>Strict governmental regulations pertaining to the gaming industry. </li></ul></ul><ul><ul><li>Change in laws, regulations & procedures could have an adverse effect on any gaming operations. </li></ul></ul><ul><li>Economic:- </li></ul><ul><ul><li>Casino gaming operations provide ½ of total revenue. </li></ul></ul><ul><ul><li>Expansion of competition is eroding Circus's market. </li></ul></ul>
  25. 25. <ul><li>Social:- </li></ul><ul><ul><li>Ability to attract high roller prospects. </li></ul></ul><ul><ul><li>Aims more at the middle income gambler & family oriented vacationers as well as upscale traveler and player. </li></ul></ul><ul><li>Technological:- </li></ul><ul><ul><li>Development of theme resort concept – new concept. </li></ul></ul><ul><ul><li>Expansion and diversification available due to a growing industry </li></ul></ul>
  26. 26. <ul><li>Financial performance :- Circus casinos have the low revenue relative to its competitors. </li></ul><ul><li>  Las Vegas focuses on catering to higher-end rollers, while the company has targeted family vacationers . </li></ul><ul><ul><li>Company has geared all of their casinos based on the family concept and has remodeled their casinos to fit its customer base. </li></ul></ul>
  27. 27. <ul><li>Circus is facing increased competition from traditional competitors who are imitating some of their business strategies . </li></ul><ul><ul><li>The latest mergers between ITT Corporation and Starwood Lodging Trust, has brought great competition to Circus. </li></ul></ul><ul><li>Growth in the gambling industry has led to geographical expansion in recent years ; as a result Circus has been faced with increased competition . </li></ul>
  28. 28. <ul><li>To remain in the business of entertainment. </li></ul><ul><li>To stay one of the innovators. </li></ul><ul><li>To broaden its market. </li></ul><ul><li>To increase its market share </li></ul><ul><li>To focus on free cash flow </li></ul>
  29. 29. <ul><li>Aim more at the middle-income gambler, family-oriented vacationer, and the upscale traveler and player. </li></ul><ul><li>Promote theme gambling resort concept. </li></ul><ul><li>Pursue joint ventures and market analysis of opportunities </li></ul><ul><li>Employ growth strategy of acquiring smaller casinos in other states. </li></ul><ul><li>Differentiate strategy for high and low rollers </li></ul>
  30. 30. 1997 Revenues 1997 Income 1996 Revenues 1996 Net Income Starwood/ITT 6597 249 Hilton Hotels 5316 250 3940 82 Harrah’s Entertainment 1619 99.3 1586 98.9 Mirage Resorts 1546 207 1358 206 Circus Circus 1354 89.9 1247 100.7 Trump Hotel & Casino Inc 1399 -42.1 976 -4.9 MGM Grand 827 111 804 74.5
  31. 31. <ul><li>Purchased as a small & unprofitable casino operations – 1974 - $50,000. </li></ul><ul><li>In 1983 – went public – experienced rapid growth & high profitability. </li></ul><ul><li>In between 1993 & 1997 – average return on invested capital was 16.5% & generated over $1 billion in free cash flow. </li></ul>
  32. 32. <ul><li>Marketing: </li></ul><ul><ul><li>Focus on middle income customer. </li></ul></ul><ul><ul><li>Offer customers good value for the cost </li></ul></ul><ul><ul><li>Concentrate marketing on repeat customers </li></ul></ul><ul><ul><li>Offer a large array of entertainment for customers </li></ul></ul><ul><ul><li>Focus on family tourists in advertisements </li></ul></ul>
  33. 33. <ul><li>Research and Development : </li></ul><ul><ul><li>Continuously upgrading building and equipment – so need to have state-of-the-art equipment </li></ul></ul><ul><li>Operations : </li></ul><ul><ul><li>Realize low profits per square foot of casino </li></ul></ul><ul><ul><li>Continuously update facilities </li></ul></ul><ul><ul><li>Design to entice family visitors </li></ul></ul><ul><ul><li>Use technology to create atmosphere for customers </li></ul></ul>
  34. 34. <ul><li>Circus Circus Enterprise describes itself as in the business of entertainment. </li></ul><ul><li>Marketing of its product cater to “low rollers”. </li></ul><ul><li>Its rules and regulation complies with regulatory control by city government regulations. </li></ul><ul><li>The laws, regulations and supervisory procedures of virtually all gaming authorities are based upon public policy concerned primarily with prevention of unfair practices . </li></ul>
  35. 35. <ul><li>The main market of the company , showing growth was Las Vegas, Nevada. </li></ul><ul><li>Las Vegas remains the largest U.S gaming market. </li></ul><ul><li>It is a destination market for most visitor. </li></ul><ul><li>It attracts overnight resort seeking vacationers. </li></ul><ul><li>Gaming revenues are expected to continue to grow. </li></ul><ul><li>Currently, in Atlantic City, Donald Trump’s gaming empire holds the largest market share(30%). </li></ul>
  36. 36. <ul><li>The next closest in market share are Caesar’s (10.3%), Tropicana and Bally’s (9.2%), and Showboat(9%). </li></ul><ul><li>There remains a number of smaller markets located around the U.S, primarily in Mississippi, Louisiana, Illinois, Missouri and Indiana. </li></ul><ul><li>Native American casinos continue to be developed on federally controlled Indian land – constitute only a small portion of overall gaming revenues. </li></ul>