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IN-DEPTH 12 February 2016
Caesars CEO interview: Opportunity in adversity
From restructuring major debt to enticing disinterested millennials, new Caesars CEO Mark Frissora has got plenty to keep him busy in 2016. His ambition, he tells Gareth Bracken, is to return the firm to its “rightful place” as the leading force in entertainment
By Gareth Bracken

Most of those present at the CEO Roundtable session at last year’s G2E Vegas show would have been getting their introduction to Mark Frissora as a gaming industry executive. The former Hertz chief executive, who took over from Gary Loveman in July 2015 as part of a transition plan, held his own in company such as Scientific Games CEO Gavin Isaacs as the panel discussed the state of the casino sector today.

Frissora will need to act just as impressively if he is to make a success of his Caesars story, with one standout priority being the firm’s ongoing attempts to restructure the debt of Caesars Entertainment Operating Co (CEOC), its largest operating division, which filed for Chapter 11 Bankruptcy back in January of last year.

Another focus for the new man – one that he shares with his Las Vegas competitors – is the millennial generation. The younger demographic of player is known to be turned off by traditional casino gaming, and it’s the job of industry leaders such as Frissora, with the aid of Nevada regulators, to find a way of reversing the trend.

Frissora also addresses some of the fallout surrounding his departure from Hertz, but we begin in the present day and his reflections on joining industry giant Caesars.

What attracted you to the CEO role at Caesars?
Over the course of a nearly 40-year career, I have worked across a range of businesses and industries, and have always had a special passion for consumer businesses – and for businesses with the potential for greatness.

Our industry needs innovation and new ways to attract younger guests to participate in a range of experiences, and skills-based games are a big step in this direction
Caesars has a strong portfolio of properties, the best loyalty programme in the industry and a great team of employees committed to delivering great customer experiences. We have great entertainment assets and the opportunity to return Caesars to its rightful place as the world’s pre-eminent entertainment company.

I have enjoyed getting to know the diverse set of industries that sit under the mega-resort umbrella, from hotel, to gaming, to food and beverage, to entertainment. The opportunity to continue to integrate these businesses and deliver a great experience is very exciting.

What have been your main areas of focus in these opening months in the job?
I spent my first several months getting to know the team and listening to those on the front line about our strengths and opportunities. That process helped me work with our leaders to build a Strategic Architecture that will inform our strategy going forward and has set our short- and longer-term objectives for the enterprise.

What insights can you offer into what was described as your “multi-year strategy for growth”?
We have great opportunities for growing the business at Caesars Entertainment. These range from upgrading our room product, particularly in Las Vegas, continuing to invest in growing the Total Rewards database and continually improving the way we operate.

What insights/experiences from your time in the car rental industry do you see as being applicable to the casino industry?
The most important similarities between the rental industry and the gaming industry are those that focus on customer service and employee satisfaction – taking good care of our guests and our customers is key to our success. The importance of improving each transaction and each interaction as well as leveraging loyalty in our marketing and customer-development programmes is also key. We have an opportunity to constantly enhance and enrich the way we serve our customers and the way we engage with them. You have to enter every day and every challenge with a T.O.M: Total Open Mind.

What were the main points you took away from the firm’s recent Q3 results?
Our business is outperforming all of our publicly traded competitors and our own expectations, particularly in Las Vegas. The hospitality business continues to be the key driver of growth, with improvement in the gaming business being slower.

What’s the latest update you can offer on the attempts to restructure CEOC debt? How confident are you of the situation reaching a positive resolution?
The restructuring process is well underway and we have made substantial progress since CEOC began its court-supervised restructuring in January 2015. Today, our most senior creditors, including first-lien bondholders and bank lenders, support our restructuring plan. These creditors aren’t only the most senior creditors but they also represent more than two-thirds of the overall capital structure. Our team is working hard to secure an agreement with more junior creditors so that we can complete the restructuring as expeditiously as possible. The recent strength of our underlying business can only prove to be positive in the process.

You spoke at G2E Vegas about being shocked at the lack of innovation in the casino sector – what are you doing to change this?
We are working hard to collaborate with the manufacturers and the regulators to bring about advances and innovation in the gaming space. We are also working internally to develop exciting and interesting spaces and experiences for our guests that bring together gaming, entertainment, group experiences and world class food and beverage options in a single package.

‘A SHOCKING LACK OF INNOVATION’
Addressing the topic of millennials as part of a panel discussion at last year’s G2E Vegas show, Mark Frissora had this to say:

As an outsider coming into the industry, I’m shocked at the lack of innovation attracting millennials, in gaming product as well as in our own casino environment. I’m not pointing fingers – in fact what I see in the industry is a lot of pointing of fingers. This is the time when we need to cooperate, get together and actually partner on innovating and creating platforms for future growth.

We’ve experimented an awful lot with the concept of changing slot play. Given the state of play with slots, we need to figure out how we can start growing that business again. It’s time to start innovating. We’re not going to replace all slot play, but certainly there’s a segment of the market we could attack right now and bring millennials into the casinos.

Regulators have just opened the door – they’ve set up a new set of regulations that allow us to interact and do it in a way that’s innovative, social and skill-based. So I think the door’s open – we now have to walk through the door.

There’s thousands of examples of where innovation has turned an industry into a big growth platform. I think that’s where we are. We’ve been doing it the same old way for a long time and it’s time to innovate.
How important will new Nevada skill-based gaming legislation be in relation to casino innovation?
Nevada’s leadership in reviewing and I hope ultimately allowing skills-based gaming is critical to the industry’s future success. Our industry needs innovation and new ways to attract younger guests to participate in a range of experiences, and skills-based games are a big step in this direction.

How important is the millennial customer for Caesars?
Millennials make up more than a third of the workforce and this is clearly an important demographic for our future. We know this group is different than older generations and it is absolutely essential we tailor experiences to attract and retain these customers.

How do you intend to develop the interactive side of the business?
Through Caesars Interactive Entertainment we operate the leading casino-themed social and mobile games company in the world. This business has performed extremely well and continues to invest and innovate.
OUT OF OFFICE
Mark Frissora offers insight into his life away from the boardroom

Are you much of a gambler yourself? What games do you play?
While I don’t play a lot, if I am out with friends I choose to play craps or blackjack.

What’s the best piece of business advice you were ever given?
Focus 30% of your time on developing people and teams

What’s your favourite book?
Straight from the Gut by Jack Welch. Jack is a mentor of mine and his no-nonsense and specific management style have always been an inspiration.

What’s your idea of a perfect vacation?
Mild weather, golf course and time spent with my family.
Your former employer Hertz has stated that during your tenure as CEO an environment was created which may have led to inappropriate accounting decisions, while your Caesars colleague Jan Jones Blackhurst has stated that you personally did nothing wrong. How much personal responsibility do you take for the apparent accounting errors at Hertz?
I am excited and focused on the opportunity to lead Caesars through its next great phase of growth and transformation.

Hertz also said that your “management style and temperament created a pressurized operating environment”. How fair is that assessment?
Hertz’s disclosure very specifically did not suggest any wrongdoing. In fact, it described me as a CEO focused on driving performance and results. I am focused on the future.

If we were to speak again in a year’s time, where do you hope Caesars will be positioned?
I hope we will have completed the restructuring of CEOC and can focus all of our energy on the business. I expect we will have continued along the path of becoming the world’s pre-eminent entertainment company and continued to expand our hospitality offerings, pushed the envelope in delivering new gaming experiences and made operating improvements across our enterprise.

This article appears in the January/February 'CEO Special' edition of Gambling Insider magazine
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