The upcoming Formula One Las Vegas Grand Prix race slated for November 23rd has not drawn as many hotel room bookings as it did last year, according to Barry Jonas, a gaming analyst for Atlanta-based Truist Securities.
Truist Securities conducts weekly room rate surveys for Strip resorts and determined that the rates for the F1 race this year are “stuck in neutral.” Jonas told investors in a Monday report that MGM Resorts International’s forecast for sluggish room rate growth during F1 appears to be playing out, according to a report by the Las Vegas Review-Journal.
For the days leading up to the November 23rd race, room rates are tracking at an average of between $200 and $800 a night at MGM properties and $150 to $400 a night at Caesars Resorts compared with $500 to $1,400 a night at MGM and $150 to $600 a night at Caesars a year ago, according to Truist research.
MGM forecasted weaker room rates in July when CEO Bill Hornbuckle told analysts in the company’s second-quarter earnings call that rates were likely to be depressed from a year ago. The lower rates amount to a roughly $30 million decline for MGM compared with last year – a margin that could improve for the company as the race date draws closer.
“We have been surveying F1 weekend rates for seven weeks now, and rates seem to have stabilized recently with little data to suggest improvements or deterioration over that time,” Jonas said in his report.
However, Hornbuckle at the time stated that two factors that could play into this year’s race included a Las Vegas Raiders home game on the weekend of Formula One and the company’s new marketing relationship with Marriott International, which has resulted in a new source of guests and revenue for MGM properties.
“I think the real issue with Formula One is it’s off to a soft start as compared to last year where we had a lot of advanced pre-bookings,” Hornbuckle has said. “I think you can see some of our (average daily room rates) are down. If you look at what we’re charging 50 percent, give or take.”
But he added that the Raiders’ home game against the Denver Broncos on November 24th, the day after the race, should draw more people to the company’s south Strip properties. “I think the good news is we have an NFL game,” Hornbuckle said. “So the south end of the Strip that only ran in the 60s last year. I think we anticipate filling that up. But the actual event itself feels soft.”
Analysts also observe a reduction in demand for Raiders tickets
Truist research also stated demand has not been as high for home Raiders games this year with the weakest game ticket sales occurring around Christmas holiday games and for the team’s home opener this week against the Carolina Panthers, which Jonas indicated is not a very compelling matchup with about 5.8% of tickets unsold. About 5.7% of the tickets remain for the game at the end of Formula One week.
Brendan Bussmann, a gaming industry analyst with Las Vegas-based B Global, said everybody knew it was going to be difficult to replicate the success of the inaugural race.
“There are other economic and calendar forces that play into rates,” Bussmann told the Review-Journal. “The sports and entertainment capital of the world continues to expand but coming off of two major inaugural events between Q4 2023 and Q1 2024 make the market stable but challenging to see the exponential growth you saw for those events. The market is still strong but difficult to repeat what we witnessed just a year ago.”
Jonas said “sluggish” has been a good way to describe room rates leading into the fall. However, he also showed hope for tickets to go up starting October, and that Las Vegas could be a good bet for investors.
Original article: https://www.yogonet.com/international/noticias/2024/09/18/79117-las-vegas-hotel-room-rates-sluggish-for-november-39s-f1-race-analysts-warn
