A Wall Street analyst said declines in gaming revenue and visitation numbers on Las Vegas Strip raise concerns over whether casino operators were too optimistic about their prospects for 2025.
Chad Beynon, a senior gaming analyst for Macquarie, recalled first-quarter earnings, when Las Vegas operators “were cautiously optimistic” about Strip adjusted earnings growth in 2025 with the outlook for group and conventions bookings rising and several major cap expenditure projects now complete. Convention attendance is up year-over-year.
“But with year-to-date visitation and revenue per room both down 6% year-over-year and gaming revenue down 1%, we think holding EBITDAR may prove difficult for the group, particularly given the recent negative revenue per room trends,” Beynon said.
The Strip generated monthly revenue of $714 million in May (-4% year-over-year), owing to baccarat drop down 10% and lower slot revenue; slot hold came in about 50 basis points below the long-term average, while slot handle grew 2%, Beynon highlighted.
Beynon pointed out that second-quarter Strip gaming revenue was down 3% compared to last year. This is in contrast to same-store U.S. regional gaming revenue growth of 4% in May and 2% year-over-year quarter-to-date, supporting a more positive outlook on regional casinos over Strip operators, he added.
“We currently expect a 1.5% EBITDAR decline in 2025 earnings,” Beynon said. “Given the monthly results, we are lowering our second-quarter Strip gaming revenue forecast to -3% year-over-year and flat for 2025. We note that the third quarter is an easier hold comp year-over-year.”
On the nongaming front, Strip revenue per room was -3% year-over-year in May, which followed +4% in April. With June Las Vegas data trending to -15% year-over-year, Beynon said they estimate second-quarter Strip revenue per room will decline 2% to 3% year-over-year.
“Las Vegas visitation declined 7% in May, which also coincides with softer TSA passenger data in May and June (-1.5% year-over-year),” Beynon said. “Based on second quarter market data trends, we think the risk to second quarter 2025 earnings is to the downside for Strip segments of Caesars Entertainment, MGM Resorts International and Wynn Resorts based on current estimates.”
