Resorts World Vegas Faces Dubious Profitability Prospects, Says Analyst

Posted on: September 3, 2020, 01:10h. 

Last updated on: September 3, 2020, 02:31h.

Genting Berhad is unlikely to realize rapid profits at Resorts World Las Vegas when the $4.3 billion integrated resort opens on the Strip next year, according to a brokerage firm.

Genting Berhad Analysis
Construction on Resorts World Las Vegas in 2018. An analyst says the venue won’t be profitable when it opens in 2021. (Image: Las Vegas Review-Journal)

Maybank associate research director Samuel Yin Shao Yang says it’s unlikely the new venue will be profitable right out of the gates, citing the effects of the coronavirus pandemic on the US gaming market, in particular Sin City.

The United States is now the country worst hit by the COVID-19 pandemic,” writes Yin in a note to clients. “If the COVID-19 pandemic in the United States does not stabilize by the time RWLV opens in the summer of 2021, we fear that it will generate losses.”

There’s something to those concerns. More than three months after Nevada casinos reopened, traffic on the Strip remains slack, particularly on weekdays. Additionally, 11 Las Vegas-area casinos remain shuttered, and at least four are slated to stay that way until June 30, 2021.

To date, the Silver State has 69,941 coronavirus cases and 1,338 deaths. The Sept. 1 case count was 239, well off the high of 1,447 on July 15.

Timing Matters

Resorts World Las Vegas, which is being constructed on 88 acres across the street from Wynn’s Encore, could be the victim of rough timing.

Unless a coronavirus vaccine beats forecast time frames and comes to market sooner than expected, Sin City’s recovery efforts could be hindered and pushed out to 2022 or 2023. That’s a significant hurdle for any new integrated resort, and one Genting will have to answer to investors.

The company is coming off its worst second-quarter performance in a decade, and its Genting Hong Kong cruise line is on the brink of collapse because of the pandemic.

With 3,500 rooms and 110,000 square feet of gaming space, Genting’s first Las Vegas venue could have its work cut out for it in terms of generating high occupancy rates and solid gaming revenue. That’s unless a vaccine emerges and the US economy rapidly improves prior to the resort’s opening.

Genting Can Be Patient

Genting owns and operates casinos in Malaysia, other parts of the US, Singapore, Philippines, and the Bahamas, so it has the luxury of waiting for a new property, in this case, Resorts World Las Vegas, to ramp-up.

The company owns nearly half of Genting Singapore, operator of Resorts World Sentosa. That’s meaningful, because the two casinos in the city-state are immensely profitable, and cash from that operation, among other businesses, can support Genting as it waits out the Las Vegas Recovery.

Forty-nine percent-owned Resorts World Genting (RWG) has been performing better than Genting Malaysia expected,” said Yin, the Maybank analyst.

“RWG reopened on 19 June 2020 with ~30,000 visitors daily, but now welcomes ~45,000 visitors daily. RWG may have recouped two-thirds of its usual visitation,” Yin continued.