Strong performance during the fourth quarter of 2021 capped off a gigantic year for MGM Resorts International, both in the company's earnings as well as the deals it made.
During the company’s fourth quarter and full-year 2021 earnings call, MGM Resorts President and CEO Bill Hornbuckle said the company set new earnings records and notched significant performance improvement compared to 2019.
“We are pleased with all that we've accomplished in ’21, and we're even more excited how this sets us up for strong momentum into 2022,” he said.
MGM Resorts has closed and is on track to close several major deals it made during the past year, Hornbuckle said. The company bought the remaining share of CityCenter — a mixed-use development that includes the Aria Resort & Casino and hotel/condo tower Vdara — from Infinity World Development for $2.1 billion. The company then entered into a $3.89 billion sale-leaseback deal with affiliates of Blackstone Real Estate Income Trust for the gaming assets.
The sale of MGM Growth Properties — MGM Resorts’ spinoff real estate investment trust of which MGM Resorts is the majority shareholder — to gambling REIT Vici Properties for $17.2 billion is set to close in the coming months.
MGM Resorts expects to close on its acquisition of the operations at the Cosmopolitan of Las Vegas for $1.6 billion during the second quarter. The company sold operations of the Mirage Hotel & Casino to Hard Rock International for approximately $1.1 billion, and that deal is expected to close in the second half of the year.
“We believe these transactions will enhance and diversify our offerings in one of the most desirable and competitive destinations in the world,” Hornbuckle said.
As of press time, MGM Resorts' stock was trading at $48.52, up 8.1% year to date. The New York Stock Exchange Composite was down 0.6% for the same time period.
Las Vegas Performance
The emergence of the COVID-19 omicron variant in November led to a rapid rise in cases, and while that didn’t affect December performance much, MGM Resorts faced significant headwinds in January at its Las Vegas Strip properties as several groups postponed bookings until later in the year, Hornbuckle said. Though elevated, cancellations have been mostly short-term with limited impact beyond March.
Forward hotel bookings have been stable over the past few weeks and are once again starting to outpace 2019 levels, he said.
“I expect that given positive COVID trends in Nevada, we will start to see meaningful loosening of COVID restrictions in the very, very near future, consistent with what we have seen in other states,” he said.
Weekend bookings have remained strong as a result of events in the Las Vegas area, including the NHL All-Star Game, the NFL Pro Bowl at Allegiant Stadium and a recent pay-per-view fight at Mandalay Bay Resort & Casino, he said. MGM Resorts’ hotels on the Strip reported 91% occupancy this past Friday and 98% on Saturday.
The MGM Grand will host the Grammys in April, and Las Vegas will have the NFL draft later in the month.
“These types of wins continue to demonstrate that the city, with MGM Resorts at its epicenter, remains a resilient and leading destination for exceptional entertainment and now most notably, sports,” he said.
MGM Resorts’ consolidated net revenue in the fourth quarter reached $3.1 billion, and that included a full quarter of operating resorts from Aria and Vdara, according to the company’s earnings report. The company’s consolidated adjusted earnings before interest, taxes, depreciation, amortization and rent costs was $821 million in the quarter.
The company's hotels on the Las Vegas Strip reported net revenue of $1.8 billion, a 26% increase compared to the fourth quarter of 2019. Adjusted property EBITDAR was $699 million, an increase of 84% compared to the fourth quarter of 2019.
Regional Properties
MGM Resorts' regional properties delivered a record EBITDAR year in 2021, as most led in gross gaming revenue in their respective markets, Hornbuckle said.
The company is reopening the regional properties’ non-gaming amenities at a measured pace as demand and resources allow, he said.
“Our teams remain focused on labor productivity, giving us confidence in our ability to sustain margins above 2019 levels longer term,” he said.
Fourth-quarter regional net revenue totaled $900 million, flat compared to the fourth quarter of 2019, Chief Financial Officer Jonathan Halkyard said. Its adjusted property EBITDAR of $309 million was a 36% increase over 2019 levels.
The company's fourth-quarter regional margins grew 900 basis points compared to the fourth quarter of 2019 to 34%, he said. Similarly, third-quarter margins grew by 866 basis points over 2019.
MGM China
Despite the continued choppiness in Macau’s operating environment because of the various travel restrictions and structural shifts, MGM China reached a record 14% in market share, Hornbuckle said. The company launched its Emerald Suites at MGM Cotai during the fourth quarter, enhancing the property’s hospitality offerings.
“We believe MGM China remains well-positioned for the market's eventual rebound given its strengths in premium mass,” he said.
There have been constructive developments with concession renewals, giving executives confidence that licenses will be renewed by the government, he said.
MGM China’s net revenue grew 9% sequentially to $315 million, Halkyard said. Its adjusted property EBITDAR decreased to $5 million.
“Travel restrictions are still the greatest bottlenecks to a more meaningful recovery in the region, but we remain encouraged by the clear signs of demand for our offerings,” he said. “In fact, for the recently ended Chinese New Year holiday period, total visitor counts to our properties were up 30% over the prior year, with our mass segment showing healthy year-over-year growth and recovery.”