Golden Entertainment Chairman and CEO Blake Sartini said Las Vegas is “a strong place to be right now,” despite people’s concerns about inflation, gas prices, and an economic slowdown. The comments echo other gaming executives on second-quarter earnings calls.
Golden reported its second highest quarterly revenue and adjusted earnings in the company’s history, surpassed only by the second quarter of 2021.
Revenues of $289.4 million for second quarter 2022 were down 1% from the $292.5 million year over year, when people had access to government stimulus, executives said.
Sartini said like other Las Vegas casinos, they’re seeing some degradation in the lower end of the database and uncarded play that benefited from the stimulus. He added, however, they’ve done a good job of replacing those people with better players at the higher end of the tiers.
“In terms of commodity prices, inflation, and general headwinds for the consumer, I think Nevada, and Las Vegas in particular, are a pretty strong place to be right now,” Sartini said. “People will continue to travel and Las Vegas continues to provide one-of-a-kind sports and entertainment opportunities, as well as significant population growth. We like where our portfolio sits and don’t see any major disruptions to their customer patterns.”
Golden executives said they were sold out on the weekends and that occupancy would have been even stronger if not for supply-chain issues with their linen provider in June. That forced them to hold back significant room inventory, which limited occupancy, primarily at The Strat on the Strip. It’s estimated to have cost Golden more than 15,000 room nights and $2 million to $3 million of EBITDA at the Strat, executives said.
“We were unable to capitalize on increasing citywide midweek group business as much as we would have anticipated,” said Golden Entertainment President and CFO Charles Protell. “We’re still missing 20 points of occupancy at The Strat relative to our 2019 levels, which offers a materialized upside for this business as the segment continues to recover.”
Protell said The Strat drafts off “the city being full” and that will be tested in the fall, when big conventions return and the Las Vegas Raiders and Vegas Golden Knights start their seasons without requiring masks.
“When we get to the end of the third quarter and into the fourth, that’s going to test the thesis for us,” Protell said. “We’re doing some touch-up work at The Strat in terms of adding some suites and other amenities and freshening up the theater to make the product more attractive to some of those conventioneers, as well as higher-end players that we are actively targeting.”
Revenues for Nevada casino resorts that include Laughlin were $107.5 million for the second quarter of 2022, compared to $106 million for the second quarter of 2021. Adjusted EBITDA was $38.9 million, compared to $46.6 million for the second quarter of 2021. Adjusted EBITDA margin was 36% for the second quarter of 2022 compared to 44% from the previous year.
Revenues for Nevada locals casinos were $39.8 million for the second quarter of 2022, compared to $43.5 million for the second quarter of 2021. Adjusted EBITDA was $19.8 million, compared to $23.6 million for the second quarter of 2021. Adjusted EBITDA margin was 50% for the second quarter of 2022, compared to 54% for the second quarter of 2021.
Revenues for distributed gaming were $121.4 million for the second quarters of both 2022 and 2021. Adjusted EBITDA was $22.2 million for the second quarter of 2022 and $24.9 million for 2Q21. Adjusted EBITDA margin was 18% for the second quarter of 2022 compared to 21% for the second quarter of 2021.
“Las Vegas is extremely resilient to downturns, which is why our portfolio was put together with that in mind in Nevada, particularly southern Nevada,” Sartini said. “The locals casino business and our hyper-local route and tavern business, are consistent and I would anticipate it being consistent through any macro downturn. That’s the most resilient part of our portfolio. If we were going to see any significant impact, it would be at The Strat in the context of the rest of the city seeing a downturn in traffic. Our airport had record visitation in June and guys on the Strip are talking about their group business coming back.”