Download - Circus circus enterprises
-MADHULIKA(4109026026)
Purchased in 1974 for $50,000 as a small & unprofitable casino operation.
By William.G.Bennett & William N. Pennington.
Rejuvenate Circus :- fresh marketing. Went public with a stock offering in Oct
1983, & experiences rapid growth & high profitability over time.
Business of entertainment. Innovators in the theme-resort concept
popular in casino gaming.
Its areas of operations are Las Vegas, Reno, and Laughlin & Nevada as well as other locations in the U.S. and abroad
It operates 9 properties in Las Vegas, 10 properties in Nevada, 1 in Mississippi & has 50% ownership in other 3.
Circus Circus -Las Vegas:-▪ 69 acres land▪ 3744 hotel rooms.▪ 1,09,000 sq ft casino space.▪ Shopping areas.▪ 2 specialty restaurant.▪ Fast food shops▪ Cocktail lounges.
In 1997 - $126.7 million was invested – remodeling.
In 1998 - $35.2 million.
Luxor – 1993.▪ Egyptian themed hotel – casino complex.▪ 30 story pyramid.▪ Two new 22-story hotel towers.▪ 1,20,000 sq ft casino in hotel atrium.
In 1997 – went major renovations – costing $323.3 million.
In 1998 - $116.5 million.▪ 4425 rooms – renovated casino space.▪ A series of IMAX attractions- 5 theme
restaurants.
Excalibur – 1990.▪ 28-story hotel towers – 4008 rooms.▪ 1,10,000 sq ft casino.▪ 12 restaurants▪ 1000-seat amphitheatre.
In 1997 – underwent renovations - $25.1 million.
The silver city casino & Slota-A-Fun combinedly offer 34,900 sq ft of casino floor.
All circus’s operations do well in city of las Vegas.
In 1997- operational earnings for Luxor & Circus Circus -Las Vegas were off 38% from previous year.
Due to disruption in services because of renovations.
Hotel room occupancy remained above 90% - low room rates.
Circus Circus – Reno:-▪ 1605 hotel rooms – 60,600 sq ft of casino.▪ Video arcades▪ Midway games & circus acts.▪ Cocktail lounges.
Remodeling - $25.6 million. In1987 – The Colorado Belle – 63000 sq ft
casino. In 1983 – The Edgewater – 57000 sq ft casino. Combined, these two properties, contain 2700
rooms & over 1,20,000 sq ft of casino.
In Las Vegas – Mirage Resorts – to build Monte Carlo, a hotel-casino 3002 hotel rooms 90,000 sq.ft. casino.
In Elgin, Illnois, - 50 % partnership - Hyatt Development Corporation in The Great Victoria styled to resemble a Victorian riverboat. 36,000 sq. ft casino space.
50 % partnership with Eldorado Limited in Silver Legacy. 1711 hotel rooms. 85000 sq.ft of casino space.
Strategies:- Aggressive growth strategies. Corporate structure – designed to
enhance the growth. A strong cash position – innovative ideas
– cost control. Competitive Edge - Invested heavily in
renovation of existing properties.
3 new projects:- Mandalay Bay:- $950 million.
43 story hotel – casino with over 3700 rooms – 11 acre aquatic environment.
In Detroit, Michigan, Circus has combined with Atwater Casino Group in a JV to build a $600 million project.
Planning to construct a casino resort along the Mississippi Gulf - $225 million.
In Atlantic city, Circus has entered into agreement with Mirage Resorts to develop a 181-acre site in the Marina district.
In 1997 – Gaming industry captured a large amount of dollars spent in U.S.
Gamblers lost $44.3 billion. Casino gambling accounts for 76% of all
legal gambling expenditures. Las Vegas – largest U.S gaming market –
largest conventional market – more than 1,00,000 hotel rooms.
Las Vegas attracts overnight resort-seeking vacationers.
Atlantic city attracts day trippers.
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
In Las Vegas, Nevada, gambling operations are subject to regulatory control by the Nevada State Gambling Control Board, the Clark Country Nevada Gaming & Liquor
Licensing Board, and City government regulations.
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.
Core Competency is casino gaming. Need to focus its efforts in Las Vegas,
Atlantic City and Mississippi. For years, analysts have questioned the
ability of gaming industry to continue high growth as industry matures.
Circus enterprise faces the risk of maintaining high growth in mature industry.
Increasing competition. Decrease in Net Income.
In 1974- Purchased by Bennet and Penington – Casino gaming.
In 1979 - Circus Circus purchased Slots-A-Fun.
In 1982 – remodeled Circus Circus. In 1983 – went public - 0ffering four million
shares on the New York Stock Exchange. In 1983 - extended the operations in Nevada,
purchasing the Edgewater Hotel and Casino on the Colorado River in Laughlin, Nevada.
In 1984 - purchased the Colorado Belle Casino - $4 million.
In 1985 - expanded the Reno facilities - constructing a 29-story hotel tower, called Circus Skyrise.
In 1990 – opened Excalibur. In 1991 - earned $84.3 million on sales
of nearly $620 million. In 1993 – opened Grand Slam Canyon –
amusement park.
In 1995 - Acquisition of privately held Gold Strike Resorts Inc. - $500 million
In 1999 - $950 million upscale Mandalay Bay resort opens on the Strip; company changes its name to Mandalay Resort Group.
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.
Circus Circus Enterprises, Inc. is in the business of entertainment, with its core strength in casino gaming.
Provide customers with entertainment that is pure play and fun.
Emphasize quality. Look for innovations to improve
customers' experience. Commit to being a leader. Attract family vacationers with fun for
parents and children. In the initial phase, company used to
focus on “low roller”. Later, it started focusing on “middle
roller”.
Strength :- Strong financial position Innovative product & Marketing Experienced management team. Theme resort concept.
Weakness:- Financial Performance. Ability to compete in the fast changing Las
Vegas market.
Opportunities:- Expansion/Diversification Theme park development. Circus has traditionally attempted to
attract the "low roller”. It has also ability to attract “high roller”.
Threats:- Increasing competition Economic cycle sensitivity.
Political:- Strict governmental regulations pertaining
to the gaming industry. Change in laws, regulations & procedures
could have an adverse effect on any gaming operations.
Economic:- Casino gaming operations provide ½ of total
revenue. Expansion of competition is eroding Circus's
market.
Social:- Ability to attract high roller prospects. Aims more at the middle income gambler &
family oriented vacationers as well as upscale traveler and player.
Technological:- Development of theme resort concept –
new concept. Expansion and diversification available due
to a growing industry
Financial performance:- Circus casinos have the low revenue relative to its competitors.
Las Vegas focuses on catering to higher-end rollers, while the company has targeted family vacationers. Company has geared all of their casinos
based on the family concept and has remodeled their casinos to fit its customer base.
Circus is facing increased competition from traditional competitors who are imitating some of their business strategies. The latest mergers between ITT
Corporation and Starwood Lodging Trust, has brought great competition to Circus.
Growth in the gambling industry has led to geographical expansion in recent years; as a result Circus has been faced with increased competition.
To remain in the business of entertainment.
To stay one of the innovators. To broaden its market. To increase its market share To focus on free cash flow
Aim more at the middle-income gambler, family-oriented vacationer, and the upscale traveler and player.
Promote theme gambling resort concept. Pursue joint ventures and market analysis
of opportunities Employ growth strategy of acquiring
smaller casinos in other states. Differentiate strategy for high and low
rollers
1997Revenues
1997Income
1996Revenues
1996Net 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
Purchased as a small & unprofitable casino operations – 1974 - $50,000.
In 1983 – went public – experienced rapid growth & high profitability.
In between 1993 & 1997 – average return on invested capital was 16.5% & generated over $1 billion in free cash flow.
Marketing: Focus on middle income customer. Offer customers good value for the cost Concentrate marketing on repeat
customers Offer a large array of entertainment for
customers Focus on family tourists in
advertisements
Research and Development: Continuously upgrading building and
equipment – so need to have state-of-the-art equipment
Operations: Realize low profits per square foot of
casino Continuously update facilities Design to entice family visitors Use technology to create atmosphere for
customers
Circus Circus Enterprise describes itself as in the business of entertainment.
Marketing of its product cater to “low rollers”.
Its rules and regulation complies with regulatory control by city government regulations.
The laws, regulations and supervisory procedures of virtually all gaming authorities are based upon public policy concerned primarily with prevention of unfair practices.
The main market of the company , showing growth was Las Vegas, Nevada.
Las Vegas remains the largest U.S gaming market.
It is a destination market for most visitor. It attracts overnight resort seeking
vacationers. Gaming revenues are expected to
continue to grow. Currently, in Atlantic City, Donald
Trump’s gaming empire holds the largest market share(30%).
The next closest in market share are Caesar’s (10.3%), Tropicana and Bally’s (9.2%), and Showboat(9%).
There remains a number of smaller markets located around the U.S, primarily in Mississippi, Louisiana, Illinois, Missouri and Indiana.
Native American casinos continue to be developed on federally controlled Indian land – constitute only a small portion of overall gaming revenues.