Las Vegas Sun NewsMGM Resorts’ hotels cash in on return of tourists to Las Vegas
Facebook
Fark
Digg
Reddit
Stumble
The Bellagio on the Strip.
Tuesday
7 August 2012
9:48 a.m.
Updated
7 Aug. 2012 10:22 a.m.
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.
Share
Join the Discussion:
Previous Discussion:
Discussion 4 comments
Only trusted comments are displayed on this page. Untrusted comments have expired from this story.
Most Popular
- Police: Suspects in fatal robbery targeted, stalked teen with iPad
- Coroner: Woman killed in apparent murder-suicide was shot, stabbed, beaten
- Witnesses offer ‘sketchy stories’ about Henderson brush fire, official says
- Coroner ID’s 3 people killed in wrong-way freeway crash
- Police release images of suspect sought in home invasion
This is a very upbeat article, and I was most "impressed" with how well MGM Resorts International performed in their second quarter.
Impressed, that is, until I got to the fourth last paragraph which stated that the company lost $145.5 million, which appears to my untrained eye to be much worse than the equivalent period one year ago even after the one-time gain is subtracted.
Perhaps stockholders got bored before they reached the end of the article and ran off to buy some more MGM stock. How else can one explain the rise in share price?
Donald Desaulniers
the fact is the executives have buried the company in massive debt of 13 billion with strategic blunders like city center--they have enough cash on hand to service debt for a year and a half unless they refi again---or sell properties. surely they will pay dearly and refi and kick the can further down the road so they can all continue to take out huge sums in their bonus/salary/option packages---they all have interest to keep the gravy train going. To do so they will continue to nickel and dime the players and employees like it is everyone's fault except their own fault! this is not a way to keep or attract loyal customers and employees----do they really care????
People do not buy stock because of what a company did previously, stock is purchased based on the expectations of the future. MGM has continued to tighten their balance sheet and with major capital expenditure improvements it is easy to see why the price rose.
$13 Billion dollars in debt!
Sounds all well and fine until you get to the end. 145 million lost in the quarter. The model is broken. Too much debt. MGM just laid out too much money to buy up Mirage and Mandalay group.
obviously some people are delusion share holders (speculators) who think stiffing the customers on comps and screwing them with additional fees while paying the executives huge compensation is a good plan. the debt has actually not changed at all--looking at the financials of the company you can quickly see that the debt number is virtually unchanged for last three years at 13billion and change--give or take a few hundred million. the interest on the 13 billion is over a billion dollars a year. let me repeat that
THE INTEREST ON THE 13 BILLION DEBT IS OVER A BILLION DOLLARS A YEAR !!!!!!!! HELLO
they congratulate themselves that they did a good job when in fact they buried a very successful and financially solid company in a huge financial hole buying and building many properties in the same stagnant market. This will take a decade or more to overcome--if at all, and the city center project will never recover the money poured into it---never.
Let us translate the results in corporate lingo. MGM is making big improvements in profit margins, enough to give massive bonuses to the few. But, they have an army of lawyers and accountants to exploit the tax codes to minimize tax consequences. It's a win win win situation! Bestow massive bonuses for upper managementon improved margins. Offer excuses as to why employees will not receive in an increase in benefits and wages AND they suffer minimal tax liabilities. True Romneyism at its best!
Wow, another press release written as a news article...
When the number of tourist increase and you own 55% of the strip, do you think maybe your company will see an increase in room reservations??
A true sign this town is in trouble is when the CEO of one of the properties goes on a reality show and proves to the world they have spent too many years in the ivory tower and no time on the floor of the property.
Of course May/June was soft. Its called the start of family vacations... Families, those strange groups of people unlike your spoiled arm charm and prodigy,.... Families are usually groups of related people with a budget.. You have been courting for the past few years,.....
Here's something amazing the boys in the Ivory Tower may not know yet, but the people who work in the casinos know intimately::: Families don't spend money at blackjack tables that offer $25 minimums.
"Isn't that special?" If correct in his assessment, why doesn't Jim Murren explain why MGM Resorts still forces 2 employees to do the work of 3 thereby making the term "customer service" an oxymoron at "his" resorts? Like so many resort "suits," Murren cares little about anything but the "bottom" line and can't see any further than the next quarterly report. I know for a fact that, if I had run my "family" restaurant in a similar manner as MGM Resorts runs theirs - long lines and shoddy service caused by short staffing - I'd have been out of business in a New York minute. Apparently, Murren hasn't a clue and couldn't care less about what really occurs on the floor where the employee meets the patron. And where is the Culinary Union? Seemingly complicit & uncaring in all of this; merrily going their way collecting dues from its members and keeping a blind eye to the emotional & physical stress heaped upon them. Shame on Murren and shame on the Culinary Union, as well!
The food quality and service has been atrocious at all MGM properties post recession. Long lines to check in and at all the buffets. It's so obvious they have pulled way back at the expense of the paying customer. Staying "home" in NJ. this fall. Revel is gorgeous and thank god, smoke free! The feds and NFL are gonna get their butts handed to them in court and we're gonna have sports betting as soon as this fall also. Won't have to take that 5 hr flight anymore to lay down a bet. Maybe I wouldn't feel this way if the folks at MGM gave a crap about the paying customer.