Increased demand for hotel rooms on Las Vegas Strip as per analyst's assessment: unwavering demand.
The Vibrant Demand for Las Vegas Strip 🎉
🔍 Wall Street's Verdict 💼Buck Wargo, our trusted analyst, believes the demand for Las Vegas Strip rooms this spring remains robust, offering a positive outlook for Caesars Entertainment and MGM Resorts International.
🔥 First-Quarter Performance 🔥Barry Jonas, Truist Securities' managing director, reported that their first-quarter Strip room-rate survey shows an impressive performance, even against a challenging Super Bowl comparison in February 2025. The uptrend in April indicates an encouraging sign for both MGM and Caesars.
💪 MGM's Victorious March 💪Despite the Super Bowl comparison, MGM's rates were up 3% overall in the first quarter, buoyed by strong weekdays that surged 15%. Weekends showed a slight dip of 7%. The Strip's strength in January, followed by a softer February, and re-acceleration in March, helped MGM regain its footing. The rebound in March rates was 6%, attributed mainly to weekday convention business, which saw a 15% rise.
🌟 Caesars' Steady Ascent 🌟Caesars also recorded a 6% overall increase in rates during the first quarter, with weekdays skyrocketing 21%. Weekends, on the other hand, dipped 7% due to the Super Bowl comparison. February rates dipped by 10% for MGM and 5% for Caesars; however, the momentum picked up in March, with rates climbing 8% for Caesars.
💬 "Our survey is not yet showing any fundamental change," Jonas shared. "This suggests to us that recent underperformance of Buy-rated MGM stock at 2.5-year low and Caesars stock at a five-year low may be overdone."
📅 Looking Ahead: April 📅Rates for both MGM and Caesars continue to rise in April, up 11% and 1% respectively. The trend is particularly noteworthy on weekends, with MGM rates up 4% and Caesars rates up 10%. Weekday rates, on the other hand, show a more varied picture, with MGM rates holding steady while Caesars rates dip by 2%.
🔥 Key Takeaways 🔥- Strong Demand: Stable demand expectations indicate that analysts, such as Buck Wargo and Macquarie, remain cautiously optimistic about Las Vegas' gaming trends.- Operational Execution: MGM's impressive earnings beat and BetMGM's strength highlight the company's operational excellence.- Increased Visibility: MGM's earnings and revenue performance offer more immediate catalyst visibility compared to Caesars.- Long-term Trends: While the Super Bowl's impact would have dominated analyst sentiment in 2024, multi-quarter trends reveal that both MGM and Caesars are rebounding well.
- The evident robust demand for Las Vegas Strip rooms in 2024, as observed by analysts like Buck Wargo, suggests a positive outlook for casino-related industries, especially for casino-personalities like the heads of Caesars Entertainment and MGM Resorts International.
- In the first-quarter performance, it's evident that the casino-games industry has shown impressively strong rates, with MGM demonstrating a 3% overall increase, mainly due to a 15% surge in weekday rates.
- Following a similar trend, Caesars also recorded a 6% overall increase, with a significant 21% rise in weekday rates, indicating shifts towards weekday operations in the casino-and-gambling industry.
- looking ahead to April, the industry is witnessing a notable rise in rates for both MGM and Caesars, where MGM's rates are up 11% overall, and Caesars' rates are up 1% overall, suggesting that the future of finance in Las Vegas' casino-culture is promising.
- In a recent statement, Barry Jonas, Truist Securities' managing director, claimed that their survey doesn't indicate any fundamental change in the casino-games industry, implying that the recent underperformance of stock for MGM and Caesar may be overdone.
- In light of these developments, it's evident that the casino-industry, particularly in Las Vegas, is poised for continued growth, with both MGM and Caesars demonstrating strong operational execution and rebounding well even in the face of temporary challenges, such as the Super Bowl impact.
