Covid devastated the travel industry in not just the United States, but also the world. The pandemic also created a special set of problems for Las Vegas and the casino operators on the Las Vegas Strip.
Caesars Entertainment (CZR), MGM Resorts International (MGM), Wynn Resorts (WYNN). and other leading Las Vegas/Las Vegas Strip operators faced multiple challenges. The Strip draws its audience from a variety of sources including domestic travelers on vacation, people attending a sporting event. business travelers attending conventions, and international travelers.
The first two on that list -- tourists and sports fans -- have flooded back to Las Vegas. That's great news for Sin City, but it's only a part of the puzzle for Caesars, MGM, Wynn, and other operators. For Las Vegas to truly and fully recover, it needs to bring back international travelers and see the convention business return.
MGM CFO Jonathan Halkyard, speaking at the Sept. 20 Deutsche Bank’s Leveraged Finance Conference, had some good news for his company and its competitors on that front.
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MGM's CFO Delivers Great Las Vegas Strip News
MGM, which recently completed its purchase of the Cosmopolitan, needs large conventions in order to fill its hotels during slower periods. That business only partially returned in 2022 with many shows happening in a hybrid format, or simply having much lower attendance than in past years.
The Consumer Electronics Show (CES), for example, returned, but many big brads dropped out and the show only drew about 30% of its normal crowd. That's a huge negative for MGM, Caesars, Wynn, and really any hotel/casino operator anywhere in Las Vegas, because CES usually fills every available hotel room at very high rates.
That business has been slow to come back, but Halkyard believes that's about to change.
"A year ago, people were very tentative in their planning and cancellation clauses and rebooking were heavily negotiated,” the CFO said, according to Casino.org. “We’re seeing very much a return to normalcy or even real enthusiasm around the group and meeting business and that’s extending deep into the first and second quarter of 2023.”
Conventions/groups and meetings make up about 20% of MGM's bookings in a normal year, but pricing for those rooms ""sets a base for the rest of the operator’s revenue management endeavors."
MGM, Caesars Confident About 2023
MGM CEO Bill Hornbuckle also has high hopes for a convention business bounce back. He commented on that during his company's second quarter earnings call.
"First, in '23, we expect to grow our convention mix and rate year over year," he said. "Also in the terms of citywides, we look forward to welcoming CES back in better form and once again the CONEXPO trade show to Las Vegas in March of 2023. This will be their first return post the COVID-shortened 2020 event. One in rotation, this is one of the most well-attended citywide events of the year with historical attendance well north of 130,000."
Caesars COO Anthony Carano also shared some upbeat comments on events and group bookings during his company's second quarter earnings call.
"Group room nights during Q2 '22 represented approximately 13% of occupied room nights in Las Vegas, up from 11% in the second half of '21. Forward group revenue pace for the remainder of the year and into '23 is up over double digits versus 2019," he shared.
Caesars CEO Tom Reeg also spoke broadly about room occupancy rates.
"You should see -- expect to see occupancy track back to the mid-90s from the high 90s, but we'd expect to be back in the high 90s September and beyond, and that's what our forward bookings show us."
