Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Jefferies meeting
In a June 23 note, Jefferies analyst David Katz wrote about the firm hosting 21 gaming, leisure, and lodging companies in Nantucket.
“In general, we came away comfortable with our theses,” Katz wrote.
- Continue to focus on the digital gaming market momentum and M&A potential (DraftKings, Rush Street, Sportradar, Genius Sports, Gambling.com).
- The commentary is more positive for casinos than it has been in a while (Caesars, Churchill Downs, Penn Entertainment on business levels).
- Lodging and Leisure companies remain confident on numbers, though with limited forward visibility (Hilton, Marriott, Host Hostels & Resorts, Xenia Hotels & Resorts, Diamond Rock).
- Leisure remains mixed, with Marriott Vacations Worldwide, Travel & Leisure, and Hilton Grand Vacations indicating mixed trends and Live Nation Entertainment expressing confidence despite the overhang.”
Las Vegas Strip
J.P. Morgan analyst Joseph Greff, in a June 23 note, surveyed Las Vegas Strip room rates for the week of July 14-20, 2024.
“For the survey period, relative to the comparable period 2023, midweek rates are +24% and weekend rates are +29% (+26% overall),” Greff wrote. “By company: MGM Resort rates are +42% for the midweek and +28% for the weekend (+36% overall); Caesars’ rates are +12% for the midweek and +11% for the weekend (+12% overall); Wynn rates are +43% for the midweek and +38% for the weekend (+41% overall); Venetian/Palazzo rates are -44% for the midweek and +28% for the weekend (-25% overall).”
Analyst Barry Jonas of Truist Securities also looked at the Las Vegas Strip.
“Our latest leisure focused Las Vegas Strip room rate survey suggests a solid Q2 is being followed by flattish Q3 trends (through August),” Jonas wrote on June 21. “This is generally in-line with our last published survey, though preliminary July/August rates are indicating flattish year-over-year across Strip properties, with/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 Q2 from Strip operators, but wait for more data points for Q3.”
Vici Properties
Jefferies’s Katz June 23 also noted that Jefferies is “fine-tuning our estimates” in regard to Vici Properties.
“We are updating our model to fully reflect our estimates of the variable rent escalation at Caesars Las Vegas and regional leases. We also fine-tuned the incremental rent incomes at The Venetian from the equity funding and addressed the debt maturities in 2025 with the assumption of refinancing headwinds. Our FY24 revenue and adjusted funds from operations/share estimates moved slightly to $3,862 million and $2.24 vs. the previous estimates of $3,859 million and $2.25. Our FY25 revenue and adjusted funds from operations/share estimates are now $3,978 million and $2.31 vs. the prior $3,974 million and $2.35.”
U.S. revenue per available room
Truist Securities analyst C. Patrick Scholes, in a June 19 note, wrote that “Overall, U.S. revenue per available room (RevPAR) was +0.3% year-over-year for the week ending 6/15/2024, per STR (Smith Travel Research), below the prior week’s result of +1.7% year-over-year and below the trailing 10-week average of +2.1%.
“As demand increasingly shifts to summer (leisure) and less to business travel, we see RevPAR growth progressing in a softer direction. The strongest performing hotels continue to be urban full-service with business orientation and markets with strong international inbound demand. We assume some impact from the Juneteenth holiday which was on the following Monday last year (long weekend) versus the following Wednesday this year. Weekend RevPAR year-over-year was -5% vs. the prior week of +1%.”
