MGM Resorts predicts record hotel revenue with March Madness

MGM Resorts International officials said a steady return of convention business, domestic leisure travel and encouraging results during Lunar New Year at MGM China is propelling the company into the new year with “strong momentum.”

The Las Vegas-based company reported Wednesday a net income of $284 million, a loss of $1.53 per share, on revenue of $3.6 billion for the quarter that ended Dec. 31. In the same quarter one year ago, the company had net income of $131 million, $2.77 a share, on revenue of $3.1 billion.

The company said net income was affected by a $2 million loss in operating income attributed to the gaming subconcession process for MGM Grand Paradise, the Macao property that was awarded another 10-year contract to operate in the special administrative region of China.

“In all my time with the company, I’ve never been more excited about our present and future as I am right now,” CEO and President Bill Hornbuckle said during its call with analysts. “I think we’re stronger, more agile, more focused and more determined than ever to win.”

The fourth quarter benefited from the operating results of The Cosmopolitan of Las Vegas, which joined MGM Resorts’ portfolio in May 2022, and the closure of The Mirage’s sale to Hard Rock International for $1.1 billion in December. And increased business volume and travel activity, mostly at the company’s Strip and regional properties, added to the increased net revenues, according to the company.

For the full year 2022, MGM Resorts reported $1.5 billion of net income, $3.49 per share, on revenue of $13.1 billion.

Chief Financial Officer Jonathan Halkyard said the company’s share buyback program repurchased about 80 million shares between 2022 and 2023, so far. MGM’s Board of Directors authorized a new $2 billion share repurchase program for the new year.

Executives touted the Strip’s strength with resorts reporting same-store net revenue up 11 percent year-over-year, excluding The Cosmopolitan and The Mirage, in the fourth quarter.

Strip hotel occupancy during the quarter was 91 percent, up 5.8 percent compared to a year earlier. But the average daily room rate rose 30 percent when compared to the same period, from $201 to $260. Executives attributed the growth to the portfolio’s luxury properties like the Bellagio, Aria and The Cosmopolitan.

MGM officials expect the trends to continue into 2023. Hornbuckle pointed to a strong events calendar in Las Vegas, including the return of large conventions like CES and construction trade show ConExpo-Con/Agg and new sporting events like March Madness and the Formula One Grand Prix later this year.

March is expected to bring in the company’s highest hotel revenue for one month, Hornbuckle said.

Elsewhere in the company

Analysts were curious as to whether BetMGM, the company’s mobile sportsbook, would expand internationally with its 50-percent partner, British gaming company Entain PLC.

Hornbuckle said that’s no longer in consideration and instead plans to use the recently acquired LeoVegas, a Swedish global online gaming and sports wagering platform, for any global online gaming expansions as well as possible mergers and acquisitions.

“The simple answer is no, we’ve moved on,” Hornbuckle said. “We value the relationship with Entain as it comes to BetMGM, but as it comes to the rest of the world, we’re going to move forward with a different proposition.”

MGM China, hard hit by COVID-19-related restrictions and closures throughout 2022, saw a strong return of guests in 2023. Hornbuckle said non-gaming entertainment, required as part of the Macao concession renewal process, helped drive visitation during Lunar New Year celebrations in January.

MGM China’s combined properties were the highest-earning businesses within the company for the month pushing its market share — in the single digits pre-pandemic — to 16 percent.

“Our room occupancy approached 100 percent, and our restaurant coverage actually exceeded 2019 Chinese New Year levels, and a lot of that was because of all these non-gaming events and concerts that drew a lot of incremental visitors to us,” Hubert Wang, president and chief operating officer of MGM China, said on the call. “As we invest more in these non-gaming amenities, that’ll help with our market share growth down the road.”

Hornbuckle said MGM’s proposed development in Osaka, Japan, is still awaiting licensing approval from the government and the company still hopes to open the $10 billion integrated resort by the end of the decade.

MGM Resorts, traded on the New York Stock Exchange, closed Wednesday at $41.43 per share, down 1.33 percent. Shares jumped 5.04 percent to $43.52 in after-hours trading.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.