MGM Sees 2024 Convention Rebound, Bullish on BetMGM
Posted on: March 16, 2023, 03:51h.
Last updated on: March 17, 2023, 01:14h.
MGM Resorts International (NYSE: MGM) executives expect a modest decline in Las Vegas Strip convention and meeting business this year, with a more earnest rebound materializing in 2024 and 2025.
MGM COO Corey Sanders, and Sarah Rogers, MGM’s senior vice president of corporate finance, commented earlier this week at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum. The conference was conducted in Las Vegas.
Sanders noted that the operator’s bookings are back to pre-coronavirus pandemic levels, indicating that 30 to 90 days out, reservations hit 50% or more. The rates at which MGM is booking rooms are elevated, and that’s not prompting demand erosion among consumers, according to the chief operating officer.
With regards to convention, in particular with MGM, we’re going to be down a little bit this year,” said Sanders. “Some of it is strategic. We have made a decision that on weekends, we’ll put less convention business in our buildings.”
He said another reason for that scenario is the previously announced $100 million renovation at Mandalay Bay Convention Center – a venue Sanders said has “needed some love.” Sanders said 2023 will be a “decent year” in terms of MGM’s Strip convention business. But the outlook is brighter for 2024 and 2025.
Las Vegas Still Offering Value
In recent months, some analysts opined that macroeconomic headwinds, such as inflation and rising interest rates, could sap consumer discretionary spending, likely denting demand for Las Vegas visits.
That ominous scenario has yet to materialize, as Nevada casinos are on a nearly two-year-long streak of posting monthly gross gaming revenue (GGR) in excess of $1 billion. Still, there are lingering complaints that operators are nickel-and-diming guests with onerous resort fees, parking costs, and the like, threatening the Sin City value proposition.
MGM’s Rogers says the operator knows the importance of Las Vegas maintaining its status as a value destination.
“We still offer a relative value. That gap has tightened a little bit,” said Rogers. “Some of those drivers that have allowed us to sustain that are things like continued programming, improved product, and the suite offering that we have. So we’re comfortable that we still offer relative value.”
Sanders observed that much of the increase in traffic at Harry Reid International Airport in Las Vegas is attributable to economy carriers, meaning the travel costs to get to the US casino hub are, broadly speaking, tolerable for a broad swath of customers.
Sanders also discussed the benefits that accrue to MGM’s land-based casinos, including those on the Strip, by way of the operator’s 50% interest in BetMGM. Entain Plc (OTC: GMVHY) owns the other half of the iGaming and sportsbook unit.
The MGM COO noted casino marketing personnel are incentivized to sign up customers to BetMGM. Likewise, BetMGM provides the casino operator with access to its customer database.
“As far as our operations are concerned, we treat BetMGM as 100% owned, and those customers as 100% owned,” he told J.P. Morgan analyst Joseph Greff.
Sanders did not speak to the possibility of MGM moving to acquire Entain outright, or buy the Ladbrokes operator out of its 50% BetMGM stake.
Sanders added that MGM’s digital gaming growth is a priority, but didn’t say if additional acquisitions will be part of that strategy.
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