For all the talk of Las Vegas bouncing back in the fourth quarter, a new report from J.P. Morgan shows Las Vegas room rates are down 12% on average during the fourth quarter, with December down 21%. Luxury demand on the weekend continues to fare the best.
Room-rate declines are an indication of lower demand and impact casino earnings. The release of the survey comes as the Las Vegas Convention and Visitors Authority makes a push to lure visitors to Las Vegas by touting in part more bargains being offered.
“We are cautious on fourth quarter Strip EBITDAR estimates for MGM (Resorts International) and Caesars (Entertainment),” said analyst Daniel Politzer.
J.P. Morgan is projecting MGM fourth-quarter EBITDAR down 0.5%, while Caesars will be down 1.5%.
“High-end weekend demand has been the most resilient segment. For the third quarter, luxury and upper-tier weekend rates are -8% versus -23% overall, while for fourth quarter, luxury and upper tier weekend rates are -6% versus -12% overall,” Politzer said. “”Wynn (Resorts) is outperforming, with fourth quarter sampled room rates +1% year-over-year.”
During the fourth quarter, sampled room rates are -12% year-over-year versus 2024 with October down 11%, November down 5%, and December down 21%, Politzer said.
Surveyed midweek rates are -13%, while weekend rates are -12%. By operator, they estimate Caesars -22%, MGM -11%, Wynn +1%, and Venetian -12% year-over-year.
In terms of resort type, luxury and upper-tier properties are tracking better, -9% for fourth quarter versus middle/lower-tier properties tracking -19% year-over-year, Politzer said.
For MGM specifically, luxury and upper-tier properties are tracking -8% with midweek -5% and weekend -11%. Its middle- and lower-tier properties are tracking -18%, with midweek -17% and weekend -20%.
During the third quarter, sampled room rates are -23% year-over year, with July -18%, August -23%, and September -27%. Surveyed midweek rates are -33%, while weekend rates are -10%.
By operator, Politzer estimates Caesars -28%, MGM -22%, Wynn -14%, and Venetian -29% year-over-year.
In terms of resort type, luxury and upper-tier properties were tracking slightly better: -22% for the third quarter versus middle/lower-tier properties tracking -27% year-over-year.
“For MGM specifically, the pain-point in the third quarter is midweek,” Politzer said. “Luxury and upper-tier properties were tracking -22%, with midweek -30% and weekend -9%. Its middle- and lower-tier properties were tracking -24%, with midweek -36% and weekend -9%.”
Looking back, Politzer said sampled room rates have been a close directional indicator for Strip industry revenue per room growth. He said their sampled August room rates of -23% is concerning, but August has a difficult year-over-year comparison. On an industry basis, August 2024 revenue per room was +14% year-over-year, he said.
