Mohegan Gaming & Entertainment CEO Mario Kontomerkos: ‘Industry will Bounce Back from Covid’

Posted on: July 5, 2020, 12:05h. 

Last updated on: July 21, 2020, 01:48h.

It used to be that customers went to casinos seeking risk. These days, they’re just looking for safety, Mohegan Gaming & Entertainment CEO Mario Kontomerkos told in an exclusive interview. Kontomerkos believes the integrated resorts market will rebound quickly from the impact of coronavirus.

Mario Kontomerkos: “Our legacy is the Mohegan tribe. They’ve been here for over 400 years. They’re going to be here for another 400 years.” (Image: MGE) The hospitality industry has been particularly hard hit by the pandemic. Will it bounce back quickly, or is there trouble ahead?

Kontomerkos: We’ve seen in this industry a number of ups and downs over the last 30, 40 years — ever since it went mainstream in the US. It’s an entertainment business at its core, and it’s typically the last to go and the first to come back. That’s the trend that we’re seeing now.

So I have to say that while the 75 days of closure during the pandemic were quite uncertain, since opening four of our seven resorts, they have been very strong. Very strong.

In fact, we put out an 8-K, which is a regulatory filing with the SEC, about two weeks ago. In that filing, we notified the public that our revenues were trending ten percent higher than last year. People have been locked up for months, and now they want to have fun. But surely the new safety measures will hurt your bottom line once things level out.

Kontomerkos: It’s sort of a counterintuitive phenomenon that has happened here. I think when we initially made our forecast about how the newly reopened business would look like, we, of course, included all of the safety measures and protocols — which I believe very strongly are the leading measures in the industry — and that was directed by our board. The board gave directions to the company to develop the highest safety standards in the industry, which we did. And I think many jurisdictions are following our lead.

We implemented thermal temperature checks at every entrance. We implemented ultraviolet-light air handlers to kill all the bacteria in the air and sanitize every hotel room.”

We installed Plexiglas at every transaction station — at table games, hotel check-ins, food and beverage stations. We have hand sanitizing stations. We’ve turned off every other machine so we’re at 50 percent capacity on table games and slots. We’ve required masks from our guests and our employees right from the very beginning.

The reason I’m telling you all this is because it really created a package of safety measures that was really well-received by our guests here in the northeast. And it has actually helped our business, believe it or not.

When we first modeled the business, we thought it would be down relative to last year. But it’s actually up. And I think that’s because people come here and they feel safe.

Safety is now at a premium when it comes to entertainment offerings. Folks have been locked up for a little while and they want to go out, but they’re uncertain as to where they can go and be safe. They now know our facilities are safe and they are coming and they are enjoying themselves. So you’re optimistic?

Kontomerkos: I am. I think the initial statistics we’ve just talked about have been very strong. Generally, I think we are driving guest visits from a wider radius than we used to. Typically, it was a two-to four-hour drive time. But we’re seeing longer drive times. This is in line with some of the statistics I’ve seen recently about the ‘staycation.’

You can imagine people today are still a little bit hesitant about air travel or train travel — they’re comfortable in their own car. Folks are willing to drive up to ten hours now, and so I think we’re seeing the benefit of that, and I think that probably continues for the foreseeable future. So I’m fairly optimistic for our business.

Mohegan Sun
MGE’s flagship Mohegan Sun property on the Mohegan reservation in Connecticut. (Image: MGE) You’re expanding internationally. But when you get a complete black-swan moment like coronavirus, do you suddenly need to reevaluate those projects and be careful not to overextend?

Kontomerkos: I tell you what, the coronavirus has obviously been a big perspective-changer in a lot of different ways. But it has strengthened our resolve in the way we do business. Business for us is a very long-term perspective. Our legacy is the Mohegan tribe. They’ve been here for over 400 years. They’re going to be here for another 400 years. We think about business in a very generational way.

My main job is to provide for the next generation of tribal members here and then their next generation. It’s always been a very long-term-oriented approach. The pandemic has shown us that diversification into the international arena is important for our ability to stand for those generations.

And so, the project in South Korea called Inspire remains on track for launch in 2022. We have a property under construction in Las Vegas that’s on track to open later this year [with Virgin Hotels]. And, subject to the final appeals process, we’ll also be starting a project in the coming months in Athens, Greece.

So we’re very, very excited about where the business is, and from a longer-term perspective, with the geographical diversification, we’ll be able to withstand these types of things even more.

Thermal imaging checks at an entrance to Mohegan Sun. (Image: MGE) Are you confident Connecticut will have sports betting soon? We realize this is subject to sensitive negotiations between Gov. Lamont and the tribe.

Kontomerkos: I am optimistic about that. I think there’s broad agreement in the state that it’s something that is, A) exclusive to the tribes, and B) a form of entertainment that should be handled by reputable, long-term partners and licensed operators, i.e., the two existing participants in the market.

I think it provides an economic benefit to the state, as well as us, in that it provides another amenity in the community and drives longer stays, which we think is obviously beneficial for everyone in the community. So we are optimistic about sports betting. Is it too early to put a timeline on sports betting?

Kontomerkos: I think so. Although I will say that the pandemic has accelerated those discussions. So we’re hopeful that will continue and we can continue to have serious discussions about it. What are some of the key future trends you see developing in the market, post-COVID-19?

Kontomerkos: Look, the business we’re in is the integrated entertainment resort, and that’s a little bit different than some of the products that are offered by some of the various participants in our industry. These are multibillion-dollar facilities — hotels, restaurants, retail, convention spaces, arenas, theme parks, casinos — everything under one roof. It’s an all-immersive type of experience that you can’t really find anywhere else — it’s not your convenience offering.

That part of our business is growing. I think that it’s under-penetrated globally. The Athens property will be the first integrated resort of its kind in Europe, and there are many more places around the world that are seeking that kind of product, because it has an enormous, positive impact on the regional economy.

I think you’re going to continue to see the expansion of integrated entertainment resorts and we’ll be at the forefront.

I do think that safety has always been at the top of our thinking in this industry — safety for our guests — and it is even more so now. I think, within the integrated entertainment resort setting, you’ll continue to see all the great products, all of the excitement, the shows, the A-list artists — everything that we normally provide. But we’ll provide that experience to you in a way that makes you feel even safer, whether that’s through physical distancing or the technology we’ve put in place. I think folks are really going to put a premium on those things.

I will also say technology that increases the perception of safety — like cashless technology, like touchless technology — will accelerate, too.