MGM Resorts Announces Strip’s Best-Ever Results for Q3 Earnings
MGM Resorts International announced Wednesday that its Las Vegas Strip properties had their best financial quarter ever, due in part to revenue generated by its newest property, The Cosmopolitan of Las Vegas, despite an overall net loss.
With The Cosmopolitan contributing and a full three-quarters of Aria’s operations, following MGM’s buyout of a 50% stake in Dubai World, the company generated $2.3 billion from its properties on the Strip, in up 67% year over year.
“We really like where we are in Las Vegas,” MGM CEO Bill Hornbuckle said during Wednesday’s earnings call with investors.
The company reported a net loss of $1.05 billion, $1.45 per share, on revenue of $3.42 billion for the quarter that ended September 30. .
MGM reported a net loss following an accounting change under a new law governing the company’s two properties in Macau.
Occupancy rates and room rates have contributed to the company’s revenue growth. It reported a 93% occupancy rate for the quarter, the highest since the pandemic began in 2020.
“The main driver of the occupancy gain is midweek demand, which is returning to more normal levels as conventions and groups return,” Chief Financial Officer Jonathan Halkyard said on the call.
He added that the average daily room rate of $227 in the third quarter was a 26% year-over-year increase.
“As our convention mix returns, we generally shift to less profitable, but still important leisure activities,” Halkyard said. “This convention activity has a higher average rate, typically $30-40 more (per day), and results in higher margin catering expenses.”
MGM is in the process of re-bidding for a 10-year gaming franchise to continue operating in Macau, China’s special administrative district. Like other businesses operating there, MGM has weathered market downturns due to COVID-19-related property closures as well as travel and entry restrictions.
Hubert Wang, president and chief operating officer of MGM China, said the company’s two resorts in Macau hope a return to online visa applications, now available in all Chinese provinces, will boost future visits.
Wang said MGM Cotai reopened on Wednesday after being closed since Sunday because a retailer there tested positive for COVID-19. The company did not say how many businesses were lost due to the temporary shutdown, which resulted in the confinement of all employees and visitors to the building.
MGM is also working on the development of integrated resort properties in New York and Osaka, Japan.
Hornbuckle said the company is submitting a licensing proposal to New York and hopes to hear something from the state by January 1.
The Empire City Casino at Yonkers Raceway is operated by MGM and also features slot machines and automated tables in a racing environment.
The company is vying for one of three casino licenses to be awarded in the New York area. But it faces fierce competition from Wynn Resorts Ltd. with a proposal for a hotel-casino complex on the Hudson River; Caesars Entertainment Inc., which recently announced a plan to redevelop a property in Times Square; Las Vegas Sands Corp.; Hard Rock International, owned by the Seminole Indian Tribe of Florida; Bally’s Corp., which operates the Strip’s Tropicana Las Vegas; and Chicago-based Rush Street Gaming.
During the third quarter, MGM also completed its acquisition of Sweden’s LeoVegas, a global online gaming and sports betting platform, for $607 million.
The acquisition of LeoVegas is the company’s first step toward expanding its interactive gaming footprint. Through the company’s BetMGM betting system, it offers sports betting in 24 states and is expected to expand to Massachusetts, Ohio and Maryland. The company has a 22% share of the US sports and iGaming markets.
MGM shares, traded on the New York Stock Exchange, fell 83 cents, 2.31%, on Wednesday to $35.11 per share in slightly above average trading. After hours, the stock continued to fall, losing another $1.61, or 4.59%, to end at $33.50 per share.
The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Patrick Dumont, president and chief operating officer of Las Vegas Sands.