Business picked up for MGM Resorts International during the second quarter, with the company on Tuesday reporting higher hotel room and occupancy rates for most of its Las Vegas Strip resorts.
The company, in reporting quarterly financial results, said that revenue per available room rose 5 percent at its Strip resorts as MGM Resorts appeared to cash in on the return of tourists to Las Vegas.
Through May, overall visitation to Las Vegas was up 2.4 percent compared to the first five months of 2011.
Chairman and CEO Jim Murren said during a conference call with analysts that the results improved, despite what appears to be a temporary decline in the eagerness of consumers and businesses to spend in Las Vegas that was detected in May and June.
Weaker room and convention bookings occurred during that period, and there will be a slight decline in revenue per available room during the third quarter now under way, Murren said.
“We observed a pocket of softness in the U.S. consumer beginning in mid-May. This was reflected in spend, particulary in domestic table games, entertainment and retail,” Murren said.
“Despite these headwinds, we were able to grow our EBITDA (earnings before interest, taxes, depreciation and amortization), our revenue per available room and our market share. The softness we experienced in convention bookings has not impacted long-term bookings,” he said, explaining that the company’s convention business for 2013 and 2014 should grow from current levels.
“We’ve also fortunately recently seen a pickup in U.S. consumer trends at our wholly-owned properties,” Murren said.
Murren also commented on two recent initiatives. He said a deal with Morgans Hotel Group to rebrand The Hotel at Mandalay Bay as a Delano property and to introduce new restaurant and nightlife offerings there will “inject some fresh energy to Mandalay Bay.”
And as the company prepares to compete in the online poker industry once it’s launched in Nevada and other states — or nationwide — MGM Resorts has rolled out a social gaming site on Facebook called myVEGAS. The company intends to use the site to build its database of real-money gamblers.
“It re-creates the Las Vegas Strip experience and exclusively features our brands. It’s a unique and fresh take on social gambling and is a very cost-effective vehicle to acquire customers,” Murren said of the myVEGAS application.
Despite its hefty long-term debt load of $13.2 billion, MGM Resorts is stronger financially than at anytime during the past three years, executives said. It’s looking at opportunities to refinance some debt, and it continues to pursue potential expansion opportunities in Toronto, Massachusetts, Maryland and Macau, executives said.
In the second quarter, MGM Resorts said occupancy was strong at the company’s biggest Las Vegas resorts, ranging from 98.4 percent to 96.9 percent at the Mirage, Mandalay Bay, MGM Grand and Bellagio.
Average daily rates increased $13 from the year-ago quarter to $237 at Bellagio. They increased $16 to $141 at MGM Grand, $5 to $183 at Mandalay Bay and $6 to $151 at the Mirage.
CityCenter, the company’s half-owned resort complex, produced income of $642,000 for MGM Resorts — a reversal from the year-ago quarter when MGM Resorts posted a $32.5 million loss from CityCenter.
CityCenter’s flagship casino-hotel Aria produced revenue per available room of $187, up 3 percent from a year earlier. With an occupancy rate of 93 percent, its average room rate was $201.
The strength in hotel operations was offset somewhat by unlucky play by MGM Resorts in its casinos.
Casino revenue fell 1 percent at the company’s wholly-owned domestic resorts. Table games won 17.7 percent of the dollars wagered, down from 18.2 percent a year earlier. Slot revenue was flat, the company said.
Overall, the company lost $145.5 million, or 30 cents per share, in the second quarter. That compares to a profit in the year-ago quarter of $3.4 billion, or $7.04 per share, which included a one-time gain of $3.496 billion related to the initial public stock offering of MGM China.
With overall second-quarter net revenue from wholly-owned domestic resorts steady at $1.5 billion and stronger business at MGM China and CityCenter during the quarter, MGM Resorts stock opened higher Tuesday on the news. It traded at $10.23, up 9 percent.
MGM China in Macau generated record adjusted property EBITDA of $187 million. Excluding $12 million of branding fee expenses, that figure was up 14 percent from the second quarter of 2011, MGM Resorts said.
CityCenter reported record adjusted property EBITDA for resort operations of $71 million, up 11 percent from the year-ago quarter.