Caesars Entertainment and MGM Resorts International, the two largest casino operators on the Las Vegas Strip, are expected to see significant economic gains following the closures of two nearby properties, according to a Las Vegas-based gaming analyst.
John DeCree, director of equity research at CBRE Group Inc., indicated in a July 2 note to investors that the April shutdown of the Tropicana Las Vegas and the upcoming July 17 closure of the Mirage will create a favorable market for Caesars and MGM, Las Vegas Review-Journal reported. The reduction in available hotel rooms is projected to increase average daily rates, thereby boosting revenue margins for existing operators.
The closures will remove 1,467 rooms from Tropicana and 3,044 rooms from the Mirage, a combined 4.9 percent decrease in the Las Vegas Strip’s main corridor hotel supply. DeCree emphasized that the Mirage’s closure will have a more substantial impact, noting that it had around 1 million occupied room nights and generated $596 million in revenue and $169 million in EBITDAR in 2023.
MGM, which controls 37,243 rooms on the main resort corridor, equating to 40.4 percent of the Strip’s supply, is expected to gain an additional $69 million to $102 million in annualized EBITDAR. Caesars, with 20,630 rooms on or near the Strip, representing 22.4 percent of the total supply, could see an incremental EBITDA increase of $31 million to $49 million from the displaced demand.
“This represents significant underlying demand for the Las Vegas Strip that will need to find a home. Given their significant room inventory, particularly in the mid-tier asset class on and around the center Strip, we believe (Caesars) and (MGM) could be best positioned to consolidate displaced demand from The Mirage,” DeCree wrote, as per the report.
DeCree’s analysis also highlighted that due to high occupancy rates at Caesars and MGM, large-scale events and weekends may strain their room availability. This scenario could benefit The Strat and Wynn’s luxury properties, attracting budget-minded travelers and higher-end guests, respectively. Wynn could see an additional $8.7 million to $31.4 million, while Golden Entertainment, The Strat’s parent company, might gain $2.5 million to $4.5 million in EBITDAR from the Mirage closure.
“While there are many variables that could impact our analysis, we see a clear benefit for all Strip operators with more customers chasing fewer rooms and ultimately driving higher (average daily rates),” DeCree was quoted as saying in the report.
Original article: https://www.yogonet.com/international/noticias/2024/07/08/73017-caesars-mgm-expected-to-benefit-most-from-mirage-and-tropicana-closures
