Las Vegas Q2 preview

The beat goes on: Analysts are confident Las Vegas Q2 volumes will beat market expectations in the next few weeks. With May GGR on the Strip up 26.7% on May 2019 and up 35.6% MoM to $655.5m, analysts at Macquarie said their survey of Las Vegas operators pointed to “Q2 beats and continued momentum” for the listed groups, with booking trends above pre-COVID levels and leisure demand driving the recovery. Scientific Games’ CFO Mike Eklund also commented on the strong momentum during the group’s strategic review/sale-IPO call earlier this week.

“The quarter is turning out to be very strong again. Momentum has continued from the first quarter into Q2. We are very confident in the consensus numbers which are out there.”

Leisure society: The impact of leisure consumers as the primary source of demand was highlighted by the 10% rise in mass play in April vs. 2019. Daily visitor numbers were at 74% of 2019 levels, however, the 8% rise in drive-in traffic vs. April 2019, “an all-time record”, was “the tailwind in the rebound” and expectations for total Strip revenues have increased 5%-14% since December.

Catch a fire: Following recent calls with operators, Caesars told Macquarie that occupancy levels were around 85% and MGM described Las Vegas as “on fire” during Memorial Day weekend, with occupancy rates “into the 90s” and surpassing 2019 levels. MGM said it expected occupancy rates for October to be above 90%, “almost a year ahead of original expectations given several months ago.”

Record revenues: Slots were performing strongly and management noted that “the propensity to game is the highest in company history, including record slot revenues,” Macquarie added. This was confirmed by Deutsche Bank, which noted that slot revenues on the Strip were up 24.5% vs. May 2019 to $358.3m and hold was up ~7bps to 8.3%, which was up 7.8% on LTM average hold.

Accounting for typical seasonality in May and June, Q2 GGR should increase by more than 30% QoQ, and “conservative expectations” for MGM, Caesars and Wynn should see them enjoy GGR rises of 20%, 25% and 11% respectively. With the market buoyant however there is potential for further upside, “like the 4% MoM decline (vs the typical -9%) in April,” Macquarie added.

Local heroes: LV local and downtown casinos have also been performing strongly. May GGR for locals was up 25.2% on 2019 to $258.5m, with slots up 24% to $219.3m on May 2019. Table revenue was up 33.6% to $39.2m in May 2019. Downtown GGR was up 37.2% to $75.2m vs. 2019, while Reno GGR was up 19.4% to $65.8m.

Check out these additional articles today at Earnings + More: