Persistent Demand for Accommodation on Las Vegas Strip: Verified by Industry Analyst
Rewritten Article:
- Pulse of Las Vegas Strip Demand*** Expert Insights *** Economy *** Hotels *** Casinos *** Las Vegas*** Buck Wargo, our go-to source
.share this piece A Wall Street analyst has shared his thoughts on the demand for Las Vegas Strip rooms this coming spring, offering a positive outlook for Caesars Entertainment and MGM Resorts International.
According to Barry Jonas, Managing Director at Truist Securities, their Q1 Strip room-rate survey showcases a robust performance despite a tough Super Bowl February 2024 comparison. And April is looking promising with a year-over-year growth, a great sign indeed.
"Despite the recent rise in recession fears, our survey isn't signaling any fundamental shifts yet," Jonas explained. "This suggests that the recent underperformance of Buy-rated MGM stock at a 2.5-year low and Caesars stock at a five-year low could be overstatedβthough we'll keep a close eye out for any potential consumer shifts."
The Q1 survey revealed that rates were increased, despite the Super Bowl comparison. MGM climbed by 3%, while Caesars showed a more significant improvement of 6%. This was thanks to strong weekday growth of 15% and 21%, respectively, compared to weekends which took a 7% hit for both.
Q1 displayed strength mainly in January, backed up by a strong CES, followed by a softer February and a rebound in March. February rates dipped by 10% for MGM and 5% for Caesars. This softness was primarily evident during the weekends, with MGM falling by 20% and Caesars by 5%.
The March data indicates a rebound, with rates up 6% for MGM and 8% for Caesars. The primary driver behind this growth is weekday convention business, where rates increased 15% for MGM and an impressive 36% for Caesars.
"I ought to mention that on our Q4 follow-up call with Caesars' CEO Tom Reeg, he mentioned our room survey directionally aligns with what he's observing as well," Jonas added.
The positive momentum continues into April. Rates are up 11% at MGM and 1% at Caesars. The weekends are stronger, with a 4% uptick at MGM and a 10% spike at Caesars. Weekdays, however, aren't as robust, with MGM seeing a 12% decrease, while Caesars falls by 2%.
On a week-over-week basis, April rates remain on an upward trend for both MGM and Caesars, "indicating steady fundamentals amidst increasing recession fears and market volatility," Jonas confirmed.
Additional Insights
- Caesars Entertainment often profits from its diverse portfolio, which includes iconic Las Vegas Strip destinations such as Caesars Palace, thanks to VICI Properties' focus on these iconic properties in the Las Vegas market[5].
- MGM Resorts International, being the largest operator on the Las Vegas Strip, possesses significant properties like MGM Grand and Bellagio, representing roughly a fourth of all guest rooms and suites in the market[1].
- The Las Vegas market typically exhibits a strong demand for rooms, although recent reports indicate a decline in international visitation beyond the high-end segment[2]. Nevertheless, MGM's diverse portfolio and strong Strip presence usually maintain demand.
For detailed forecasts specific to Q2 2024, it would be beneficial to consult analyst reports or financial summaries from that period.
- The strong growth in casino games revenue, particularly at Caesars Palace and MGM Grand in Las Vegas, aligns with the positive trends observed in the Las Vegas Strip's hotel demand, indicating a buoyant casino-and-gambling culture.
- As the largest operator on the Las Vegas Strip, MGM Resorts International leverages its significant properties such as MGM Grand and Bellagio to maintain demand, while Caesars Entertainment, with its diverse portfolio including Caesars Palace, benefits from its focus on iconic Vegas destinations, contributing to the enduring casino-games industry.
