The economy has been a bit wobbly. The U.S. may not be in a recession, but we're in a period of, let's call it economic concern.
Prices at grocery stores and at gas pumps remain high while the housing market has cooled but not come back to Earth. Add in looming fears of job cuts, led by the big tech companies trimming thousands of workers, and you can see why people might hold onto their wallets a little more tightly.
You would think these realities (and fears) would cause people to be more cautious with discretionary spending on gambling, eating luxurious meals, spending big on entertainment, and booking lavish hotel rooms.
That may be happening in some areas. But Disney's (DIS) theme parks and many cruise lines continue to see strong demand. And likewise, the economic pessimism is not affecting Las Vegas.
In fact, Caesars Entertainment (CZR) and MGM Resorts (MGM) have reported that a slowing economy has not been bad for business. Both explained this during their most recent earnings calls, while they expressed optimism about the coming quarters along with plans for what's next on the Las Vegas Strip.
Image source: Shutterstock
Las Vegas Strip Business Is Back
Both Caesars and MGM reported strong business on the Las Vegas Strip.
"Our Las Vegas segment continued to deliver strong results, with $491 million of adjusted Ebitda," Caesars Chief Operating Officer Anthony Carano said during the casino operator's third-quarter earnings call.
"...Occupancy was strong, reaching 94%, driven by July and September. Cash hotel revenue and profit set a new Q3 record. Gaming revenue also set a new Q3 record during the quarter."
MGM reported similarly strong results.
"Net-net, 2022 is shaping up to be a record year for many of our resorts, and we believe a fundamental change in people's perception of travel and the value that it brings to their lives in Las Vegas and MGM Resorts is benefiting this emerging theme," MGM Chief Executive Bill Hornbuckle said during his company's third-quarter earnings call.
Hornbuckle also made clear that business has been booming in the company's higher-end properties.
"Business is exceptionally strong right now in Las Vegas at MGM Resorts, and we see the market remaining exceptionally hot. In particular, we are seeing outsized strength in our luxury resorts, where pricing remains robust. In fact, October was our highest month ever in terms of hotel revenue," he said.
Las Vegas Has Bright Skies Ahead
Despite darkening economic skies, both Hornbuckle and Carano have a very positive outlook. That's partly because the pandemic has faded and partly because Las Vegas has a stellar lineup of events.
"Programming also remains an exceptional story, which further solidifies Las Vegas as the nation's top sports destination. We will host a men's NCAA West Regional for Suite 16 in Elite 8 rounds at T-Mobile in March and Formula One, as you know, were selected the weekend of Nov. 16 next year," Hornbuckle said.
The F1 race is doubly important because of when it's happening.
"That weekend happens to be one of the slowest historic weekends of the year for us ahead of Thanksgiving. We'll open our hotel calendar tomorrow for those dates and expect an exceptional demand based on our studies of other host cities," he added.
Carano sees positive news in the makeup of visitors to Caesars properties.
"Group room nights during Q3 of '22 represented approximately 12% of occupied room nights. Forward group revenue pace for the remainder of the year and into '23 is up over double digits versus '19. Results in our 55-plus segment in Las Vegas were up again in Q3 to pre-covid, continuing the trend we experienced in the second quarter," he said.
The Caesars COO is also excited about two other things.
"International travel continues to recover and remains a tailwind. Las Vegas has further runway for growth with many exciting new entertainment and sporting events coming to the market over the next 18 months," he added.
Black Friday Sale
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