The new year is shaping up to be a strong one for MGM Resorts International’s Strip properties as Park MGM and Mandalay Bay revive and convention attendance picks up, according to Wall Street banks.
The casino operator’s Las Vegas room rates are tracking 13 percent to 20 percent higher in the first quarter compared with the same period last year, according to surveys by JPMorgan and Credit Suisse published Monday.
MGM Resorts completed the $550 million upgrade and rebranding of Park MGM in December just as Lady Gaga kicked offer her much-awaited residency at the property’s theater. Park MGM room rates are tracking 45 percent higher compared with last year, when it was engulfed in construction, Credit Suisse said.
Mandalay Bay also has seen room rates rally this year as the stigma associated with the Oct. 1, 2017, shooting fades. Rates at the property, which is also home to MGM Resorts’ largest convention center, are up 27 percent, according to Credit Suisse.
MGM Resorts also is benefiting from an increase in travelers attending conventions and meetings, according to Credit Suisse. The bank estimates attendance at annual, large-scale conventions will grow 12 percent in the first half, including
8 percent in the first quarter. The Las Vegas Convention and Visitors Center declined to give a convention forecast for the first quarter.
World of Concrete attendance rose about 4 percent this year to about 60,000, while attendance at the AVN Adult Entertainment Expo jumped 8 percent to about 40,000, according to organizers. Large conventions can fill up several resorts, causing room rates to increase.
MGM Resorts opened two conference centers in the past 12 months to attract more meeting and business travelers.
“The extremely strong rate growth in our survey is driven by rate compression from major events in Q1,” Credit Suisse said in its report.
The upbeat outlook for MGM Resorts at the start of this year contrasts with the negative sentiment surrounding the company and the Strip just a few months ago.
Strip resorts reported lower-than-expected third-quarter revenue amid one of the strongest periods of U.S. economic growth in years, raising concerns that Las Vegas growth might have hit a wall. Gaming executives placed the blame on a drop in the number of city events, such as concerts and fights.
Credit Suisse said the Strip’s poor performance in the third quarter was an anomaly and possibly caused in part by some artists avoiding Las Vegas in the aftermath of the Oct. 1 shooting.
“We don’t see last summer as a harbinger of a roll-over in the leisure customer,” Credit Suisse said.
MGM is scheduled to hold a call Wednesday with analysts to discuss its 2018 results and outlook for the first quarter. A positive forecast would end a series of disappointing ones by the company dating back to early 2018.
MGM Resorts last year missed revenue forecasts due to the lingering impacts of shooting, disruptive construction at Park MGM and fewer events at T-Mobile arena during the third quarter. That sent the shares of MGM Resorts tumbling 40 percent from their 2018 highs.