Wall Street analysts and gaming consultants cited record revenue in November to justify bringing the Formula 1 race to Las Vegas, which augurs well for the Super Bowl in February and upcoming races.
Gross gaming revenue of $820.9 million in November was a 22.6% increase over the $669.5 million in November 2022; it was the second highest monthly total in history.
Even though higher-end luxury properties gained the most benefit from the race, it helped bolster Nevada’s gaming revenue to an all-time November high at $1.37 billion.
November’s average daily room rates reached a record $249 for the city, a 33.7% year-over-year increase, while revenue per available room exceeded $204, a 34.8% year-over-year increase. The average daily rate was $270 on the Strip, 35% higher than the $200 a year ago in November.
“Net-net, we think today’s release is a proof point for the inaugural F1 race’s success,” said Barry Jonas, an analyst for Truist Securities.
Jonas said he’s awaiting more F1 commentary from gaming companies when fourth quarter earnings are released at the end of January and in early February. Not everything, however, went as expected for the race’s outcome and not everyone benefited as predicted, he added.
Caesars Entertainment executives, speaking at a recent Truist conference, said the company fell short of its projected $25 million year-over-year lift (5%) in adjusted earnings from the race weekend, Jonas said. MGM Resorts International, however, declared all-time record hotel revenue for the weekend and the month of November, while the fourth quarter could also be a record.
“Overall, higher-end properties with closer proximity to the track had a more robust weekend, while mid- to lower-tier and further-away properties saw less uplift,” Jonas said. “Despite some negative press, the inaugural F1 race was robust for Vegas’s major players, driven by the high-end consumer. We expect F1 going forward to have wider appeal.”
Jonas said the F1 momentum should continue into New Year’s Eve. The Las Vegas Visitors and Convention Authority is forecasting nearly 400,000 visitors for the celebration. That will be followed by the first-ever Super Bowl at Allegiant Stadium in February. The city also has momentum with the opening of a new luxury resort in December in the Fontainebleau Las Vegas.
In a note to investors, John DeCree, an analyst at CBRE, also touted the F1 race, which helped the Strip set a record for November with a 22.6% year-over-year increase in gaming revenue to $821 million.
“As anticipated, the incremental F1 play came primarily on the table-game side, with table win surging 61.9% year over year to $410.1 million on a 39.8% increase in table drop,” DeCree said. “Baccarat did most of the heavy lifting in November, given the demand from international VIPs during F1.”
Baccarat win increased 208.7% over November 2022 to $178.3 million on a 90.1% increase in volume to $938.5 million. Excluding baccarat, table win still increased 18.5% year over year. Slot win, $410.9 million, declined 1.3% despite a modest 1% increase in handle, DeCree said. “Overall, F1 drove strong high-end table game play, which likely benefited the upper-tier Strip properties the most.”
DeCree pointed out that overall visitation to Las Vegas increased a “modest” 0.8%. However, the mix of major events like F1 drove the 37.7% lift in Strip revenue per room, which was almost entirely due to the 35% increase in average daily rate to $270, a new all-time monthly record for the Strip. “What had historically been a seasonally slow month, November, is now poised to be one of the best months for the Strip, anchored by F1,” DeCree said.
That was echoed by casino consultant Brendan Bussmann, managing partner of B Global, who said Las Vegas will build off the race, having made it to the other side of the worst of it, specifically traffic congestion and disruptions.
Bussmann said the three Raiders’s home games in November attracting fans of the New York Jets, New York Giants, and Kansas City Chiefs also helped the month’s showing.
“It shows why Nevada, specifically Las Vegas, needs to continue to diversify and bring events like F1,” Bussmann said. “You’ll get higher numbers with gaming revenue, room rates, and sales and other taxes. There’s an opportunity for F1 to educate Las Vegas on the whole economically and then it becomes more apparent that the Sports and Entertainment Capital of the World can and should host events like this.”
Since visitation for the month was up less than 1% at 27,300 over November 2022, Bussmann said it shows the race attracted a different type of customer: international visitors and those who hadn’t traditionally come to Las Vegas much or at all and came to spend money.
“It was a strong month and the shape of things to come for Las Vegas,” said Oliver Lovat, CEO of the Denstone Group. “Next year will be even bigger and better for Formula One. These large-scale events have proven that the demand exists. They’re good for the city. It shows 2023 has been a very strong year for the city, and with the Fontainebleau opening, we’re looking forward to a strong 2024.”
