Mandalay Bay Struggles for Occupancy Post-Vegas Shooting, Admits MGM, As It Revises Revenue Forecast
Posted on: April 27, 2018, 04:00h.
Last updated on: April 27, 2018, 02:49h.
MGM Resorts International’s Mandalay Bay is taking longer than expected to recover from the Las Vegas shooting, the company’s CEO Jim Murren told analysts during a Thursday conference call to discuss Q1 earnings.
Murren said the property’s revenue declined by 6.3 percent during Q1 to $245 million, while occupancy was at just 85 percent, a 6 percent decline from the corresponding period the previous year and the lowest MGM property on the Strip after unfashionable Circus Circus.
This, and the disruption caused by the $550 million revamp of the Monte Carlo, caused MGM management to lower its projected revenue growth. The stock market reacted badly to the news, with ten percent – or some $1.7 billion – being wiped off the company’s market capitalization by the end of trading on Thursday. It’s the worst stock hit MGM has taken in over two years.
On October 1, 2017, 64-year-old Stephen Paddock opened fire from his 32nd-floor room in the Mandalay Bay on a country music concert on the Las Vegas Strip below.
The wealthy real estate owner and habitual gambler killed 58 people and injured over 800 more before dying from a self-inflicted gunshot wound to the head. His motive for carrying out the worst mass shooting in US history has never been understood.
“It’s in recovery mode,” said Murren, of the resort. “It has not recovered as rapidly as we had hoped. Again, this is a property that is undertaking a tremendous challenge – unprecedented – and we’re getting our arms around what that has meant, but that has lagged behind what we had predicted in terms of its performance.”
Breaking With Conventions
As MGM’s fourth-largest property, Mandalay Bay accounts for 8.5 percent of its revenue, with much of its business coming from conventions attracted to its 2 million square feet of exhibition space.
MGM COO said a large convention was canceled in February along with several smaller events. Meanwhile, demand for convention space at Mandalay Bay in the period around the first anniversary of the shooting this October is understandably low.
Sanders also said some leisure tourists are electing to stay away from the property and, along with potential Monte Carlo guests, are opting to stay with competitors.
“We didn’t know how impactful the Monte Carlo disruption would be,” said Murren when discussing the revised revenue projections. “We felt that we could manage around it and we haven’t been able to. And we didn’t know exactly what it would take to basically re-launch Mandalay Bay. Those are on us. And that’s on me, I know better.”