Analyst: Super Bowl home prices could set Las Vegas Strip record
The Kansas City Chiefs and San Francisco 49ers clinched a spot in Super Bowl LLVIII on Sunday. One analyst said the big game could break Las Vegas Strip home price records.
Truist Securities analyst Barry Jonas notes in a new report that the current price levels at Caesars Entertainment Corp. (NASDAQ: CZR) and MGM Resorts International (NYSE: MGM) hotels on the Las Vegas Strip The average room rate is $800 per night. That compares to $300 a night in Phoenix a year ago. He admitted it would be difficult to compare the 2023 Super Bowl in Phoenix to this year's rematch in Sin City.
The Super Bowl is becoming a major event," Jonas wrote. "Room survey data shows that average daily room rates at both MGM and Caesars increased significantly during Super Bowl weekend. Our investigation suggests that most properties in both companies' portfolios are likely to experience significant price declines, as most prime strip rooms have already been sold out via the internet. "
MGM and Caesars are the two largest operators on the Las Vegas Strip. Super Bowl XVIII will be held at Allegiant Stadium, home of the Las Vegas Raiders.
Advantages of the Super Bowl compared to F1
November's Las Vegas Grand Prix - the first Formula One (F1) race to come to Las Vegas in four decades - was a success. But at the operator level, the recovery has been largely limited to high-end casino hotels. These include MGM’s Aria, Bellagio, Cosmopolitan, Caesars Palace and Wynn Las Vegas.
For Caesars in particular, with the exception of Caesars Palace, most of the operator's strip properties are considered mid-priced venues, meaning the Formula 1 race doesn't offer much in the way of benefits. However, casino-hotels like Caesars' Flamingo and Horseshoe and MGM's Excalibur and Luxor may be positively impacted by the Super Bowl.
“As with F1, higher-priced hotels appear to benefit the most, although unlike F1, where the proceeds mainly benefit the upper class, mid-range hotels also receive higher returns year after year at the Super Bowl. rating." Jonas added.
Jonas noted that the Super Bowl could offset a decline in home prices in March due to the absence of the CON/AGG conference and some softening in home prices during the Consumer Electronics Show (CES) earlier this month.
More information about Las Vegas Strip hotels
Jonas also pointed out that MGM's recent decision to increase resort fees at Aria, Bellagio, Cosmopolitan and Vdara, while placing a burden on guests, will result in earnings before interest, taxes, depreciation and amortization ( EBITDA) increased, which may help the first quarter) for operators.
The analyst added that the debut of the Fontainebleau Hotel in Las Vegas won't affect room rates at other competing hotels, with the much-maligned venue proving to be more competitive than the second-largest integrated resort on the Las Vegas Strip. Resorts World Las Vegas is more stable.
Jonas concluded: “Fontainebleau’s rate trend is similar to Bellagio’s and currently looks better than Resorts World’s June 2021 launch, which initially showed some strength and then sharply Down."
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Source: www.casino.org
