In the rapidly changing coronavirus environment, acting MGM Resorts International CEO Bill Hornbuckle found some definitives among uncertainties in Thursday’s first-quarter earnings conference call.
Hornbuckle, in the first earnings call in his new role, said New York-New York and Bellagio would likely be the first of the company’s 13 Southern Nevada outlets to open — whenever that turns out to be.
The company is burning about $270 million during each month that its domestic properties remain closed and has laid off and furloughed 63,000 workers.
Hornbuckle said MGM would release its opening strategy within two weeks.
“While we have always placed health and safety at the forefront of all that we do, there are new imperatives,” Hornbuckle said in his introductory remarks. “Consumer confidence is key to economic recovery and thoughtful strategies are vital to building public trust. This is a responsibility we take extremely seriously.”
Hornbuckle also said the company is developing digital innovations for touchless interaction across the guest experience.
“We know there are a number of key areas that are essential to protect the public and build confidence in our ability to put people back to work and safely welcome guests,” he said. “We’re collaborating with public health officials, experts in epidemiology and biosafety, and both state and federal governments to come up with a set of protocols that will help deliver a safe environment. These will include measures like physical distancing, stringent sanitation and provisions of PPE, crowd management and more.”
Hornbuckle believes gaming will open universally in Nevada, meaning every company will have the opportunity to emerge at its own pace.
“We’re probably looking at two or three offerings initially,” he said.
New York-New York is simpler to run with only 2,000 rooms, and Bellagio would be able to compete with neighboring high-end properties on the Strip.
“From there, we’re talking about what other properties should open, if any, at that point in time,” he said. “Most of these properties need to be between 30 and 50 percent (occupied) to generate any kind of cash that is meaningful, i.e. meaning not going backwards. So we’re going to see how the market responds.”
He also said the company has been eyeballing space between Mandalay Bay and Luxor for tailgating gatherings prior to Las Vegas Raiders games at Allegiant Stadium, using the West Hacienda Avenue overpass of Interstate 15 as the company’s pedestrian gateway to the stadium — if and when National Football League games are played before in-person audiences in 2020.
Hornbuckle said he has confidence in that group business, including conventions, will come back eventually, but it will take longer than the Southern California drive market’s return.
“We do believe, because drive-in traffic particularly spikes in the summer, that regionally we’ll see a substantial amount of drive-in; there’s obviously pent-up demand,” he said.
Chief Financial Officer Corey Sanders said about half of the conventions and trade shows on MGM’s books for 2020 canceled, but half of those have already rebooked for later dates.
“We have more rooms on the books now for 2021 than we did for 2019 at the same time in 2018,” Sanders told investors.
Hornbuckle also told investors that the company will continue to be bullish on Asia, with Macao and Japan being growth opportunities for the company, and that sports betting and iGaming — wagers on video-game competitions — will pick up in the months ahead.
The company reported net income of $807 million, $1.64 a share, on revenue of $2.3 billion, which was down 29 percent from the same quarter in 2019. The reason for the increase: the $4.6 billion sale of the MGM Grand and Mandalay Bay real estate to a joint venture real-estate investment trust that includes affiliated MGM Growth Properties and The Blackstone Group earlier this year.
MGM withstood effects of the closure of its domestic properties in March and its two casinos in Macao in February with the sale and with cost-savings measures delivered with its MGM 2020 strategy.
“While there’s no proven playbook for the current challenges we face, I have faith in our deep operating experience, our expertise in safely managing public gatherings, the strength of our long-term plan and our tenure in this business,” Hornbuckle said. “More than that, I have a tremendous amount of confidence that the men and women at MGM Resorts and our partners around the world will rise to this challenge as they have on so many occasions before.”
MGM stock fell 63 cents a share, 3.6 percent, on volume slightly above average. After hours, it fell another 63 cents, 3.7 percent, to end at $16.20 a share on a day when the Dow Jones Industrial Average fell 1.2 percent overall.