A Wall Street analyst attributed the decline in tourism in Las Vegas to a broader problem in national travel, rather than a specific problem with that market.
The take from Chad Beynon with Macquarie runs counter to the media bandwagon that the decline in Las Vegas visitation is specific to that market, due to customers getting gouged.
“We note that significant declines in Vegas (revenue per room) coincided with weak TSA passenger volumes nationwide in May and June, suggesting a broader travel phenomenon and not just a Vegas-specific issue, which we will continue to monitor closely,” Beynon said. “While we believe the long-term Vegas thesis remains intact, we worry softness from leisure and international customers will last through the year.”
Beynon said second-quarter earnings for Strip casinos were better than expected; about 60% beat consensus by about 8%.
For regional operators, Beynon said commentary has been positive. Operators have pointed to growth at the lower tier for the first time in two years, while rated play remains healthy.
Second-half regional adjusted earnings estimates remain unchanged after the second-quarter earnings releases, Beynon said. Estimates for 2026 have increased by 0.6%, driven by MGM Resorts International and its high-end regional properties and strength from Red Rock Resorts and Boyd Gaming.
“The same could not be said for Vegas, which saw accelerating softness in the second quarter, particularly on the non-gaming front,” Beynon said. “This revised third-quarter estimates lower by about 5%, but down just 1% for fourth quarter and 2026, with expectations of a rebound in group/conventions, while high-end properties continue to outperform, evidenced by Wynn’s Vegas growth in the second quarter.”
In terms of stock performances, second-quarter earnings were neutral for regional operators while negative for Las Vegas, Beynon said. They were positive for both Macau and online operators. “Given second quarter earnings and trends through July and August, we rank gaming sub-sectors as follows: 1) Online; 2) Regionals; 3) Macau; and 4) Vegas.”
For online, third-quarter market hold has been solid at 11% and flat year over year, Beynon said. Their models show gaming-revenue growth at 22%, with 14% for online sports betting and 33% for igaming. That will accelerate to 34% in the fourth quarter, with 39% for online sports betting and 28% igaming, due to weak online sports betting hold driving second-half gaming revenue growth of 30% year over year.
“We view pullbacks as long-term buying opportunities, with operators generating positive free cash flow at reasonable valuations,” Beynon said.
For regional operators, July gaming revenue increased “a robust 5%” year-over-year, including 3% same store.
“Save for a blip in the first quarter due to weather, calendar, and tariffs, the regional gaming consumer has been steadily improving since late summer 2024,” Beynon said. “This, combined with commentaries on lower-end growth, an administration determined on lowering the 10-year yield, and reasonable valuations, give us increased confidence in making regionals our No. 2 sector for the remainder of the year.”
Beynon placed Macau as the third hottest sub-sector in gaming. The recent momentum has been priced into shares, since the sector is +30%-40% over the last three months (versus +9% S&P 500). Las Vegas Sands and Wynn Resorts are one standard deviation above their five-year average multiple. August gaming revenue growth is expected around +13%-16% year over year, representing three straight months of double-digit growth.
“This should result in +5% sequential growth for estimates,” Beynon said.
