Chapter 1, Problem 1.35SC

Discuss how managerial accounting can be used at Caesars Palace (Learning Objectives 1, 2, 3, 4, and 5)

Note: This story is the first part of the Caesars Entertainment Corporation serial case contained in every chapter in this textbook.

Caesars Palace® Las Vegas, owned and operated by Caesars Entertainment Corporation (CZR), opened in 1966. The Nevada hotel-and-casino complex has been featured in several movies including Rain Man, Iron Man, and The Hangover Part III. Caesars Palace is the twelfth largest hotel in the world.17 Caesars Palace^®Las Vegas, at the start of 2015, included six towers (named Augustus, NOBU Hotel, Julius (formerly named Roman), Palace, Octavius, and Forum) containing almost 4,000 guest rooms. Beyond guest accommodations, the complex also included casinos, retail shops, restaurants, nightclubs, a 4,296-seat entertainment venue, and a large convention facility.

17 Source: https://en.wikipedia.org/wiki/List_of_largest_hotels_in_the_world, as of January 8, 2016.

Caesars Palace^® Las Vegas made headlines when it undertook a $75 million renovation. In mid-September 2015, the hotel closed its then-named Roman Tower, which was last updated in 2001, and started a major renovation of the 567 rooms housed in that tower. On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the tower.

Each guest room in the Julius Tower features designer furniture, including beds boasting a custom-upholstered headboard, thick carpet, contemporary paint colors, a 55-inch flat-screen TV, and upscale artwork. Each guest room has a stocked minibar, likely offering such standard favorites as gummy bears, candy bars, beer, vodka, water, carbonated soft drinks, chips, and other assorted snacks and beverages. Each bathroom has a double-sink floating vanity, custom-lighted vanity mirrors, a stone shower with two glass sides, and both a rain shower and a hand-held showerhead. In-room toiletries boast the luxurious Gilchrist & Soames-branded soap and shampoo.

With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20.2% increase, reflects, in part, the room improvements.

Requirement

What types of decisions might the management of Caesars Palace^® Las Vegas need to make over the next several years? In other words, how might managerial accounting information be useful to the management of Caesars Palace^® Las Vegas?