After the recession hit, companies and tourists shunned the country’s largest gambling hub. Now Las Vegas is on a winning streak.
MGM Resorts International’s stock surged to a eight-year high Thursday after the casino giant showed resurgent sales growth in its home market, lifting earnings above Wall Street estimates. The results followed strong reports from Las Vegas Sands Corp. and Wynn Resorts Ltd., suggesting Vegas’s comeback is here to stay — with some help from non-bettors.
Big conventions have returned and tourists are flocking to the Strip’s new nightclubs and restaurants, as hotel operators rebrand and refresh old Vegas landmarks to attract new cash-paying crowds.
While the number of new casinos and hotels under construction remains well below historical norms, the city continues to invest in non-gambling attractions, underscored by the planned move of the Oakland Raiders football team to Las Vegas.
“Entertainment continues to be a key driver for our company and the primary reason people visit our resorts,” MGM Chief Executive Officer James Murren said on a conference call Thursday. He pointed to the year-old T-Mobile Arena, which will soon host the city’s first professional hockey team, and a new theater being built for esports.
Sands Chairman Sheldon Adelson said his Las Vegas casinos reported their highest quarterly profit since 2008. Wynn founder Steve Wynn said his hotel rooms in the city generated the best revenue in the history of his company, with the 75-year-old executive announcing plans to spend $400 million to $500 million building a lake and meeting center behind his Las Vegas casinos.
“This town is a real safe bet,” Wynn told investors.
Executives have also learned to operate their businesses more efficiently. Wynn Resorts has rejiggered its casino floor, putting higher-yielding games in more prominent positions and moving destination games like craps into secondary locations. MGM is benefiting from a multi-year efficiency push that has all its Las Vegas hotels working together to book conventions and meetings.
But with Easter falling later this year, MGM expects fewer conventions, leading to flat second-quarter revenue on the Las Vegas Strip, Murren said. Full-year revenue should still rise in low to mid-single-digit percentages.
Vegas tourism, at 42.9 million visitors in 2016, has been setting records for the past three years. Convention attendance was up 3.4 percent in the first quarter due to large events like the Conexpo in March, which drew 140,000 attendees from the construction industry. Hotel room rates rose 8.3 percent in the first quarter to an average of $140 a night, according to the Las Vegas Convention and Visitors Authority.
Gambling revenue on the Las Vegas Strip, a weak spot in recent years as casinos proliferate across the U.S., rose 5.5 percent in the first quarter to $1.68 billion. That result was largely driven by baccarat, a favorite game of Chinese tourists, resuming its growth, according to Brian Egger, a Bloomberg Intelligence analyst.
©2017 Bloomberg L.P.