Las Vegas is back, and it’s just in time for some of the companies relying on a recovery. In May, the Las Vegas Strip saw gaming revenue climb 6.4%, to $505 million, and for the last year, revenue is up 4.3%, to $6.33 billion.
This is in stark contrast to regional gaming, where casinos across the country are seeing revenue declines because of fierce competition. But Las Vegas plays a different game, drawing customers in for the party, and getting them to gamble while they’re there. It’s also more expensive to increase supply on the Las Vegas Strip, which has helped keep supply level since the financial crisis.
The next step
The top end of the market has been doing well over the past two years, and Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN) have been the beneficiaries. Las Vegas Sands’s Las Vegas revenue was up 7% in the first quarter, while Wynn’s was up 6.6%. But MGM Resorts International (NYSE:MGM) and Caesars Entertainment Corp (NASDAQ:CZR) haven’t seen the same success in the lower end of the market.
MGM Resorts International (NYSE:MGM)’s domestic resorts saw just a 0.6% rise in revenue, and Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, and Circus Circus all saw revenue decline. At Caesars Entertainment Corp (NASDAQ:CZR), Las Vegas Sands Corp. (NYSE:LVS) revenue was down 2.6%, and property EBITDA fell 6.3% in the first quarter. The top end of the market may still be driving revenue gains across The Strip, but with revenue up 6.4% in May, the second quarter should be much better.
Is this a long-term trend?
Are the dark days finally behind MGM Resorts International (NYSE:MGM) and Caesars Entertainment Corp (NASDAQ:CZR), which have the most riding on success in Las Vegas Sands Corp. (NYSE:LVS)? I think MGM’s road to recovery is well on its way, and its $13.9 billion in debt will actually provide positive leverage as The Strip’s revenue recovers.