Las Vegas Strip Nongaming Revenue Proving Sturdy, Says Analyst
Nevada cassino companies notched revenue gaming revenue (GGR) of $1.315 billion in October, the best October on record and the sixth-best month inward history. But contributions from the nongaming side of meat lifted Las Vegas Strip operators.
Strip operators, such as Caesars Entertainment (NASDAQ: CZR), MGM Resorts International (NYSE: MGM), and Wynn Resorts (NASDAQ: WYNN), posted October sales of $714 million, an telling effort when considering the month included ane to a lesser extent weekend than it did inward 2022. Among the catalysts was a revenue increase per usable elbow room (RevPAR).
Strip RevPar ontogenesis inwards Oct came in at +13% YoY, while visitation increased 2% YoY (-1% vs 2019). Based on Las Vegas STR data through Nov. 25, we approximation that Strip RevPar ontogenesis could speed up to ~18% inwards November, driven by continued lodging strength at the richly oddment (link) and F1 for the weekend of Nov. 17-19,” wrote Macquarie psychoanalyst Tchad Beynon in a take note to clients on Friday.
He’s likely onto something with that assessment, as MGM CFO Jonathan Halkyard said at the Bank of America Leveraged Finance Conference before this week that the Las Vegas Grand Prix weekend was the highest-grossing weekend inward the chronicle of the operator’s Strip venues.
Las Vegas Strip October Vibrancy Could Lead to Q4 Beats
A potentiality positive degree for operators such as Caesars, MGM, and Wynn is that they extend guests a plethora of revenue-generating amenities beyond gaming. That’s important at a clip when it appears as though GGR may feature hit a temporary top.
That’s to say, Las Vegas Strip operators tin can go on posting whole revenue growth and show resilient fifty-fifty if gaming revenue experiences a small decline. That resilience also dispels the notion that Las Vegas gambling casino companies generate the mass of their sales from gaming. In reality, solid food and beverage, and amusement stoke to a greater extent revenue than gaming.
That’s important because gaming revenue put up be volatile, but other sources canful smoothen things come out for Strip operators.
“Assuming similar market place portion out for MGM, CZR, and WYNN and minimal cyberattack disruptions, we wait MGM and CZR to flap expectations inward 4Q for their Las Vegas segments,” adds Beynon. “Given the continued resiliency inwards Vegas, we are increasing our 4Q Strip GGR calculate to -1 % YoY (from -3 % YoY). We now expect +4% GGR ontogeny inwards 2023.”
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Caesars, MGM, and Wynn are the ternion largest publicly traded Strip operators. Beynon has “outperform” ratings on the for the first time two, with damage targets implying upside of 45% and 47%, respectively, from stream levels. The psychoanalyst has a “neutral” rating on Wynn, though his damage calculate on that stock up implies upside potentiality of 36%.
Of that trio, Wynn is to the lowest degree levered to the Strip, as Las Vegas accounts for 23% of its revenue. Macau is the biggest driver of that company’s earnings and sales.
The Strip accounts for 47% of MGM’s sales and 45% of Caesars’ revenue, according to Macquarie data.
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