Analysts say Las Vegas Strip can continue rapid sales growth
On Wednesday, the Nevada Gaming Control Board (NGCB) noted that Clark County’s gross gaming revenue (GGR) increased 7.5% year over year in July to a record $1.28 billion. The Las Vegas Strip contributed $835 million of that total. At least one analyst expects the rapid growth of U.S. casino hubs to continue.
In a new note to clients, Macquarie analyst Chad Beynon highlighted dynamics from non-gaming sources, including revenue per available room (RevPar). That's a big win for Caesars Entertainment Inc. (NASDAQ: CZR ), MGM Resorts International (NYSE: MGM ) and Wynn Resorts (NASDAQ: WYNN ), among others, in Las Vegas. Very important for operators with significant hotel presence on Gas Boulevard.
On the non-gaming front, July's Strip RevPar was +4%, while August STR data suggests it will be another strong month for the Strip, leading to mid-teens RevPar for operators number of digits. The pipeline is poised for growth in the third quarter," analysts noted. "This is consistent with a record month for Las Vegas airport passenger traffic in July, including the most international passenger traffic since January 2020. "
All three names had brutal performances in August. However, analysts believe that they all have the potential to recover by the end of this year.
Caesars and MGM are popular with Macquarie
MGM and Caesars are the two largest operators on the Las Vegas Strip, so both rely heavily on trends like gaming revenue growth and increasing non-gaming revenue.
Macquarie's Beynon is optimistic about the two zone kings, giving them an "outperform" rating. He set a price target on Caesars of $70, which represents a 26.6% upside from Thursday's closing price. Analysts forecast MGM pricing at $60, a 36.3% jump from Thursday's final report.
With a high-profile calendar of events in the coming months, stars could further boost revenue for Las Vegas Strip operators, including Caesars and MGM.
“We believe the return of the conference and a strong sports/event calendar over the next few years (e.g., NCAA Division I Men’s Basketball Championship, Formula 1, LV Raiders and Golden Knights games, 2024 Super Bowl, etc.) should provide some assistance. The level of support/growth in strip GGR and non-gaming revenue,” Beynon added.
More data points bode well for Caesars
The Las Vegas Strip, Nevada's largest gambling market, was the most eye-catching statistic in the July GGR report. But there were donations across the board, including from locals in Las Vegas and downtown.
“Nevada’s July GGR results were also strong, with year-over-year GGR increases of 6% for Las Vegas locals, 9% for downtown, and 7%/+ 9% for Reno/Laughlin,” Beynon pointed out.
While neither Caesars nor MGM operate venues downtown, and the Bellagio operator has no presence in Reno/Lake Tahoe or Laughlin, Caesars does. The Reno/Lake Tahoe and Laughlin markets are relevant to Harrah's operators as the company operates three casino hotels in Reno, two more in Lake Tahoe and two in Laughlin.
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Source: www.casino.org