Las Vegas Strip and Macau Bring MGM Best Post-Recession Numbers
Posted on: February 22, 2014, 05:30h.
Last updated on: February 22, 2014, 03:15h.
Further signs that Vegas is beginning to bounce back from the recession, and certainly some reasons to be cheerful for MGM Resorts International: the company’s Q4 and FY 2013 results – just out this week – show that revenues in the final quarter of the year rose 10 percent to $2.4b, while adjusted earnings rose 21 percent to $609m, making it officially the “best operating performance since the recession” of the late 2000s.
But despite the upturn in financial performance, expenses and impairment charges meant that the company still posted a net loss of $38.3m for the quarter but, to put those figures into perspective, consider that for the corresponding quarter of 2012 that same net-loss was $1.22b.
Progress not perfection, right?
The Strip Leads the Way
While revenues from MGM’s operations across the U.S. remained flat at $1.48b, they were up on the Las Vegas Strip for the fifth consecutive quarter, with luxury resort complex CityCenter – of which MGM owns 50 percent – recording its best quarter ever, and generating $1.25b in revenue for the entire year.
The good news wasn’t just from Vegas, though. MGM China’s casinos in Macau – of which MGM Resorts owns 51 percent – rocketed by almost 27 percent to $926m, with earnings reaching a record $238m. Revenues from VIP gamblers rose a whopping 32 percent, while mass-market gaming was up 12 percent, and slots rose by 16 percent.
It’s no surprise, then, that MGM CEO Jim Mullen announced that the company is on track to complete its second casino property in Macau, MGM Cotai, for early 2006. He did, however, announce that the expected costs had risen $300m to $2.9b, due to the necessity to “increase the scope and the complexity of our entertainment offerings.”
This may be a reference to the idea that Macau might waive its cap on table games for operators that devote a significant amount of their resources to non-gaming entertainment, a reflection of the Chinese gambling mecca’s desire to diversify its tourism market. Buoyed by success in the Far East, Murren said MGM was also looking to expand into markets such as South Korea and Japan; MGM is one of several high-profile casino operators who’ve been looking to hit the Japanese gaming market the second it becomes legal, with the goal of being open in time for the 2020 Summer Olympic games in Tokyo.
Social Gaming Drawing New Gamblers
Looking to the future, Mullen expressed enthusiasm about the progress of MGM’s new casino in Prince George’s County, Maryland, and praised the company’s social casino operation myVEGAS, which recently passed the 2m mark for Facebook users. Of those, 80,000 players had recently visited MGM brick-and-mortar properties, he said, underlining social gaming’s importance as a customer acquisition tool.
Little was made of the company’s online gambling partnership in New Jersey with Boyd Gaming and Bwin.party, although Mullen did say that MGM was in talks with state regulators to regain its license in Atlantic City so it can once again become equal partners in the Borgata Casino.
While MGM’s Las Vegas figures are promising, the city still has some way to go towards making a full financial recovery; room rates remain relatively low and tourism numbers are still short of expectations. A meeting of industry figures at the recent Global Gaming Expo discussed the need to alter the city’s visitor demographic and invest even more in areas other than gambling. Today, the summit concluded, shopping and nightclubbing are becoming more popular than slots and table games, and are certainly incredibly lucrative ventures when successful.
Speaking at the expo, MGM executive Dan D’Arrigo said: “A decade ago, about 60 percent of our revenue was generated in the casino and the rest came from other amenities, like hotel rooms, food and beverage and attractions. Now, it has flipped. The reality is that we had to change because of the proliferation of gaming elsewhere, and we had to differentiate our product, particularly to businesspeople in conventions and to international visitors.”
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