The Mirage’s room rates have suffered a big drop as the iconic Las Vegas Strip resort nears its closing in mid-July.
Hard Rock International is shuttering the property to pave the way for reconstruction of a resort on the site with a 2027 opening. The hotel will close on July 14; the entire property shuts down July 17th.
Analysts continue to speculate on who benefits from the elimination of 3,000 rooms from the market.
“Closing the hotel portion on July 14 could drive some upside to Strip properties though June and July,” said Barry Jonas, an analyst for Truist Securities. “Room rates for the Mirage have been down 46% and 44% year over year for June and July, suggesting low demand for the property as it shuts down.”
“With the Tropicana Las Vegas now demolished and the Mirage closing in July, about 4,500 less rooms will be available on the Strip for some time,” Jonas said. “While MGM Resorts likely already siphoned its best players from Mirage, we see MGM and Caesars as well positioned here. Additionally, operators cited minimal negative impact from Fontainebleau in its early months, while we think Venetian’s renovations will likely only cause modest disruptions in 2024/25.”
Overall, Las Vegas Strip operators are finishing the second quarter on a solid note in terms of room rates, but the Truist Securities report suggests third-quarter rates are flat in year-over-year comparisons, as the city awaits the full impact of the Mirage closing.
“Our latest Las Vegas Strip room-rate survey suggests a solid second quarter is being followed by flattish third quarter trends through August,” Jonas said. “This is generally in line with our last published survey, though preliminary July/August rates are indicating flattish year over year across Strip properties, despite tougher comps. With the Mirage set to close in mid-July, it’s possible we see rates improve for shorter booking windows soon after. Overall, we expect a solid second quarter from Strip operators, but wait for more data points for the third quarter.”
Truist tracks leisure rates over the internet for 28 Strip properties.
The second-quarter Strip rates were trending 15% higher year over year, with MGM Resorts International and Caesars Entertainment rates also up 10% and 6%, respectively, Jonas said. As for weekend rates on the Strip, MGM and Caesars were up 17% and 11%, while weekdays were up 11% and 7%, respectively.
Wynn Las Vegas rates showed significant growth, with total rates trending up 36% for the second quarter. While Jonas said they don’t have a view of September rates yet, preliminary third-quarter rates for July and August were indicating up 1%, up 2% and down 5% year over year for the Strip, MGM, and Caesars respectively.
Truist said the survey shows June rates are generally flattish compared to prior year for both MGM and Caesars, down 1% and 2% respectively. July and August data showed mixed trends, with MGM up 1% and 2% year over year and Caesars down 9% and 1%.
Jonas pointed out that MGM CEO Bill Hornbuckle recently told CNBC of continued booking momentum into the summer, with occupancy rates of mid-90s, up about 200 basis points year over year. Hornbuckle also noted room rates were trending up mid-single-digits in the 90-day booking window, suggesting revenue per room up high single digits for the summer months.
“While our survey data only runs through July, we’re seeing signs of growth to corroborate management’s commentary,” Jonas said. “We think some of MGM’s relative strength could be attributed to its recent Marriott (partnership).”
In the report, Truist noted that the Durango Casino & Resort has room rates to maintain parity with Red Rock Resort after coming off highs in April. Management said in the first-quarter earnings report that there was some cannibalization from Red Rock.
