During Wednesday’s MGM Resorts third-quarter investors call, President and CEO Bill Hornbuckle noted the company was in a great position, due to “the strategic choices we’ve made over the past decade.”
Record revenue of $4.2 billion for the third quarter of 2024 seems to bolster Hornbuckle’s thesis.
That doesn’t preclude areas of concern, notably in regard to table games in Las Vegas, which analyst Joseph Greff of J. P. Morgan termed “a little bit soft.”
MGM Resorts CFO and Treasurer Jonathan Halkyard said the report indicated table-game revenue is down year over year. “This was almost entirely due to our high-end baccarat business. This is the way our business is and the timing of the trips from these largest customers is not, of course, our choice. And some of that just didn’t fall to us in this third quarter as we would have expected it.”
Hornbuckle noted that the balance of MGM’s table-game revenue is up 12%, if baccarat is omitted. “It shows that if you take out the top six or seven players, where there was a substantive swing between hold and not showing up, it accounts for a great deal of the miss.”
“Hold was down … 15% from the year before,” Hornbuckle added. “And between that and missed business, it’s like an $80 million miss in baccarat for us.”
Hornbuckle admitted the quarter got off to a slow start in July with eight consecutive days of 120-degree heat, compounded by the closure of Interstate 15 for three days due to an accident.
“July was impacted substantively, then the quarter got better,” Hornbuckle said. “We had some substantive convention business in August then, and September came in well. Some of the core things we hoped for — ADR (average daily rates), slots of note — all produced, leaning into our casino database.”
The forthcoming F1 race is also an area of concern. Hornbuckle was asked if the race was going to have the same financial impact — an estimated $30 million “headwind” — since the prior investor’s call.
Hornbuckle said MGM was still looking at the same number. “The thing we can’t replicate is when it was first announced last year, it sold out relatively quickly, particularly our hotels. So the leverage, the yield on that kind of tight time frame when we were selling rooms at Bellagio for $2,000 a night, it’s really the big three (the Bellagio, MGM Grand, Mandalay Bay) that will carry that burden.”
Hornbuckle also added that the construction of the Fountain Club in front of Bellagio was capitalized in 2023; this year, it will be expensed. “You put those two things together and unless we get really lucky in the casino – and anything can happen – we expect that number to hold.”
There was also a question about the mix of casino guests and if convention and business travelers would become dominant. MGM Resorts Chief Operating Officer Corey Sanders said the mix will remain the same, vacationers along with business folk. “That mix is where we like it right now. I wouldn’t envision that changing that much next year.”
Rege Behe is lead contributor to CDC Gaming. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.
