The record gaming revenue for the Strip and fifth highest revenue month of all time in February have Wall Street analysts bullish on Las Vegas prospects for the rest of 2024.
The combination of hosting the Super Bowl, the convergence of Chinese New Year, and a strong convention calendar generated $800 million in Strip revenue, a 12% increase over February 2023, and boosted visitation by nearly 300,000 year over year.
This helped raise the overall statewide revenues to $1.34 billion, a gain of 8.5% over February 2023.
CBRE Senior Analyst John DeCree spoke optimistically about the special events and conventions lifting average daily room rates. Las Vegas visitation increased 9.5% in February.
“While the event schedule undoubtedly supplemented visitation, there was also a significant lift in convention activity with attendance up 15.3% year over year,” DeCree said. “Occupancy on the Strip ticked higher in spite of the incremental room supply at the Fontainebleau. Much of the occupancy gain came midweek due to the elevated convention activity. With weekend occupancy on the Strip already strong, the greatest opportunity this year will be from the continued convention recovery and improving midweek occupancy. This should help drive some of the top line at the core or mid-tier properties. Overall, it’s encouraging to see continued growth in visitation, convention attendance, and occupancy – all signs the market is absorbing new supply.”
DeCree, who noted that the Strip increase would have been 8.5% if not for the extra day from leap year, wrote that the market benefited from the Super Bowl and Chinese New Year, bringing in high-end table-game play.
“We continue to see evidence that the high end of the market is outperforming in Las Vegas,” DeCree said. “Average daily slot handle was essentially flat in February, while average daily non-baccarat table drop increased 23%, at least partially attributable to the Super Bowl. However, the revenue upside from higher non-baccarat table volumes was limited due to relatively low hold. This unfavorable hold corroborates commentary from Caesars (Entertainment) during the March conference circuit regarding a string of bad luck at its Las Vegas properties.”
Caesars CEO Tom Reeg at the J.P. Morgan conference in March reported lower-than-normal table hold in January and February, but remained confident that easier comparisons through the balance of the year can result in positive full-year 2024 growth.
Baccarat win increased 82% year over year on 50% growth, DeCree said. Baccarat win for the first two months of the year still gained a solid 47.2% over the prior year period.
“However, this growth was due mostly to luck, including an easy hold comparison in January and favorable hold in February. Overall, baccarat volumes were up a more modest 5% for the first two months of the year,” DeCree said.
Off the Strip, downtown gaming revenue increased a modest 2.5% in February, with stronger table volumes and easier hold compared to a decline in slot handle.
Among Las Vegas casinos that cater to local residents, gaming revenue increased 3.9%. The increase in table drop, however, was a notable 21.2%, which DeCree said is likely due to the ramping up at the Durango Casino & Resort.
Barry Jonas, an analyst for Truist Securities, also highlighted the Durango in his note by citing growth in locals-casino revenue of 4%, even though it’s likely the property is cannibalizing others.
“Red Rock Resort’s Durango property is included in the balance of Clark County, where gross gaming revenue is up 9% year over year in the months since the property’s opening in December,” Jonas said. “We note that win/unit/day for the county’s slots was down 7% year over year and table win/unit/day was down 22% in February. This could suggest some cannibalization from Durango, though Boyd Gaming management noted that they aren’t directly seeing this.”
As for the overall market, the strong February proves previous commentary about Las Vegas events, Jonas said.
February Las Vegas visitation was up 10% year over year. Per the Las Vegas Convention and Visitors Authority, Strip occupancy rose 1%, with revenue per available room and the average daily rate up 46% and 43%, respectively. Weekend occupancy was up 1% year over year, with midweek up 2%. Available room inventory was up 3% year over year with total occupied room nights up 9%. Drive-in customers were up 3%, though traffic at the Nevada and California border fell by 1%.
“We note quarter to date that gross gaming revenue is trending above our estimates across the Strip,” Jonas said in reaffirming buys for MGM Resorts International and Caesars Entertainment stock.
