We just finished a rather insane news week in Las Vegas. The quarterly earnings calls always offer insight into how casino corporations operate. This week was no different but there are distinct factors at play that made this week different. There was a bump in the road for the big guys on the Vegas Strip. Here’s a quick overview in the order of the earnings reports and calls.
Mostly Casino Biz
August 1 morning – Caesars Entertainment reports earnings that weren’t great but not awful. Hotel rooms are seeing pressure (lower demand and lower prices). However, their guidance for the third quarter was very negative. It almost seemed as though they were blaming MGM Resorts for driving room rates down and for not booking enough events.
August 1 afternoon – Wynn Resorts reports earnings. The hiccup here was in Macau. Again, their guidance for the third quarter wasn’t good. In addition to a lack of events, Wynn said there was a lack of conventions in the third quarter. They even blamed Yom Kippur for keeping people away. Oy Vey!
August 2 morning – MGM Resorts reports earnings and it wasn’t pretty. The second quarter was bad. They expect the third quarter to also be bad. They’re blaming the lack of a big fight (Mayweather vs. McGregor last year was huge) and conventions and group bookings.
Tilman Fertitta Speaks To CNBC
Casino stock carnage: Does Vegas have a problem? from CNBC.
The owner of the Golden Nugget laid out the financial reality of Las Vegas market in an interview with CNBC. This is information that the casino corporations wouldn’t discuss in their earnings call while they tried to put a positive spin on things.
Fertitta is still bullish on Las Vegas but does understand that fees are having an effect on visitors. Both Fertitta and the other companies don’t see the second quarter result and third quarter forecast as a long-term problem.
Wynn is already ahead of their forecast for 2019 and MGM and Caesars both seem confident about the 4th quarter and next year. While leisure customers are putting pressure on the casino operators to lower prices, the average daily room rates (ADR) have increased from the same period last year.
- Caesars Entertainment ADR: +$7 to $145
- Wynn Las Vegas ADR: +$15 to $313
- MGM Resorts ADR: +5 to $161
Boyd And Red Rock Resorts Earnings Are Pretty Good
Boyd Gaming reported earnings a week before the others. The officers on the call were downright giddy. They were especially pleased with the performance of the Las Vegas locals casinos. Suncoast and the Orleans had a particularly good second quarter. This was the 13th straight quarter the Las Vegas Locals casinos had a higher EBITA. Boyd’s downtown casinos also improved. The parent company of Station Casinos, Red Rock Resorts also posted positive second-quarter earnings.
Breaking News: Las Vegas Is Changing
Okay, this isn’t news. Las Vegas is always changing. The great convention center expansion is bringing in new people that don’t mind paying fees because it’s usually on someone else’s tab. Meanwhile, leisure customers visiting on vacation are looking at other options more than ever.
There’s a reason Airbnb bookings in Las Vegas doubled last year. There’s a reason Boyd and Station Casinos aren’t seeing the financial hits that the Vegas Strip is. Las Vegas has always had a great variety of properties for different budgets. That hasn’t changed but it appears as if more vacationers are exploring those options. (Airbnb sign-up invitation)
The casinos on the Vegas Strip can’t survive with only one segment of visitors. They may have pushed the fees as far as they could and will have to regroup and come up with a balanced structure that appeals to tourists as well as business travelers. They got themselves into this mess and they’ll get themselves out of it.
Quick Hits
There’s always a lot happening in Las Vegas. While the topline news in Las Vegas circles around corporate earnings, there is plenty happening in Sin City.
- Smith and Wollensky on the Vegas Strip closed earlier this year. The building is currently being taken down. After space is cleared a brand new 20,000 square foot TARGET will open. (Target.com Top Deals, for those interested.) This isn’t what I want in Vegas but it will certainly be busy. It will be useful for tourists and residents at Veer Tower, MGM Signature and other nearby apartments and condos. Read more here.
- The Las Vegas shooting case from October 1, 2017, is closed. There’s nothing to see here.
- There’s a new Lego Vegas! This has been floating around for a couple of weeks so it isn’t exactly news. The new Lego Las Vegas set has Bellagio, Luxor, Encore, Stratosphere at a mini Fremont Street Experience. *Buskers may be extra. Read more here.
- Speaking of the Bellagio, someone jumped into the lake. See TV news coverage here.
- A new lounge named Electra will be opening at The Palazzo. No word if Oedipus will be opening at The Venetian. Read more here.
- Speaking of bars, I just found a couple $1 beer specials. Rockhouse at The Venetian has $1 Pabst Blue Ribbon at Happy Hour from 4p-7p Monday-Friday. AmeriCAN at The Linq also has $1 drinks. This deal is from 7:04p–8:04p for PBR drafts and well drinks. The walk from Rockhouse to AmeriCAN takes about the same time as drinking a beer. If you’re making the walk from one to the other grab a beer for the walk.
- The Pinball Hall Of Fame might be moving to the Vegas Strip. Read more here.
- It looks like Gordon Ramsay has moved on from trying to kill me. A couple people were injured by a flaming tiki drink at Hell’s Kitchen at Caesars Palace. Read more here.
- Legal marijuana is more popular than expected. Read more here.
- The Big Blues Bender returns to the Plaza September 6-9. You can see the flyer here.
- If you love hockey, you might want to check out the Vegas Rookie Faceoff at City National Arena from September 8-11. Yes, the Golden Knights will participate. Read more here.
- Stevie Wonder is playing three shows in Vegas this week. Read more here.
- “Jersey Shore” in Vegas! How is this still a thing? Anyway, here’s your promo.
Rumor of the week: World Series Of Poker Leaving Rio
Vital Vegas tweeted that there is “next level chatter” that Caesars is shopping the Rio. I’ve been reading that Caesars is shopping RIO All-Suite Las Vegas Hotel and Casino for years. Scott also said the World Series Of Poker would begin play at the new convention center, Caesars Forum, in 2020. (You can read about Caesars Forum here.)
Even though both are likely to happen someday, Caesars says that WSOP is not on the move. They have to deny the move right now. When WSOP does move, they will make a big deal about the reimaged new WSOP location.
The sale of Rio and move of WSOP make as much sense today as they did 5 years ago. I have little doubt both will eventually happen. It almost seems as though Caesars has been holding onto the Rio for the past couple of years only because they need a home for the WSOP. Moving to the strip brings up a slew of issues for the poker tournament but it’s bound to happen eventually.
If a sale of Rio is imminent, Caesars will have to make temporary arrangements for the WSOP in 2019 (they could elect to pay rent at the Rio) before moving to the new facility in 2020. The rumors make sense but I’ll believe it when I see it.
Monthly News about Atlantic City and New England Casinos
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Atlantic City August 2018 | Look, up in the sky! It’s the Atlantic City Airshow!
New England Casinos August 2018 | Promotions at New England Casinos + MGM Springfield Opens!
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