Recent profit catalysts are coming for casino operators on Las Vegas Boulevard. With the closure of Tropicana Hotel and Mirage Hotel and Casino in Las Vegas, total room supply on Las Vegas Boulevard has decreased by 4.9%.
$MGM Resorts International (MGM.US)$The company with the most hotel rooms operating on Las Vegas Boulevard owns 13 hotels with nearly 37,000 rooms, including Luxor, Aria, Excalibur, Bellagio, Mandalay Bay, Metropol, MGM Resorts International Park, and New York, New York.$Caesars Entertainment (CZR.US)$, $Wynn Resorts (WYNN.US)$And Genting Group are also major participants. In addition, VICI Properties (VICI.US) owns Caesars Palace, MGM Grand, and Las Vegas Venetian Resort. Analysts believe that before Hard Rock International develops the Mirage Hotel site, some middle-level properties of MGM Resorts International and Caesars Entertainment may benefit. Hard Rock International announced in May of this year that it plans to reopen the Hard Rock Las Vegas in the spring of 2027.$VICI Properties (VICI.US)$CBRE Group (世邦魏理仕) analysts said, 'We estimate that Mirage Hotel has about 1 million rooms, with a revenue of $596 million and EBITDAR of $169 million in fiscal year 23. This represents a huge potential demand on Las Vegas Boulevard, and this demand needs to find a home.' Based on the fair share of each operator's 1 million room nights from Mirage Hotel in fiscal year 23, DeCree and his team estimated the potential incremental EBITDAR of Caesars Entertainment, Golden Entertainment (GDEN.US), MGM Resorts International, and Wynn Resorts. DeCree believes that the importance and duration of supply contraction are still not fully recognized by investors.
Since the beginning of this year, MGM Resorts International's share price has fallen by 3.7%, and Caesars Entertainment's share price has fallen by 20.6%. Golden Entertainment's cumulative decline this year is 27.1%. In the meantime, Red Rock Resorts (RRR.US) stock has risen 3.6%. In terms of quantitative analysis, MGM Resorts International has the highest Seeking Alpha (ALPHA) quantitative rating among casino operator groups.$Golden Entertainment (GDEN.US)$For investors, the importance and duration of supply contraction are still not fully recognized.
Although the overall fundamentals of the Las Vegas Strip have held up relatively well, the supply of the Fontainebleau Las Vegas and Resorts World Las Vegas has grown greatly. However, due to rising operating costs and macroeconomic uncertainty, investor confidence remains low. Nevertheless, DeCree emphasizes that average daily room rates continue to climb, and consumer spending remains high, benefitting from a strong event schedule and ongoing recovery in meetings and international demand.
'We expect earnings in the 2Q24 to be roughly in line with expectations or slightly better than expected, and given the actual catalyst of supply contraction on the Las Vegas Strip, we believe forward-looking estimates may be too conservative, which could help boost investor sentiment entering 2Q24.'
Since the beginning of this year, MGM Resorts International's share price has fallen by 3.7%, and Caesars Entertainment's share price has fallen by 20.6%. Golden Entertainment's cumulative decline this year is 27.1%. In the meantime, Red Rock Resorts (RRR.US) stock has risen 3.6%. In terms of quantitative analysis, MGM Resorts International has the highest Seeking Alpha (ALPHA) quantitative rating among casino operator groups.$ALPHA (0303.MY)$Quantitative analyst
Edited by Jeffrey