The Super Bowl was more proof that Las Vegas has evolved to be “the new sports and entertainment capital of the world,” MGM Resorts International’s Bill Hornbuckle said.
During his company’s fourth-quarter and full-year 2023 earnings call, MGM Resorts' president and CEO said having the Super Bowl in the company’s backyard created another strong hotel and casino event, driving average nightly rates near $1,000.
The event yielded three of the top five room revenue days ever recorded along with near-record event gaming volumes, Hornbuckle said.
“The game weekend is typically a strong event for MGM Resorts, but having the game in town amplified those results dramatically,” he said.
The debut of the Super Bowl in Las Vegas came months after Formula One racing entered the market in November as the largest city event in its history. Both events were major successes for MGM Resorts, but unlike the race, which was isolated to the company’s premium properties, the Super Bowl drove demand across the board, attracting thousands to its ballrooms in the MGM Grand.
“With both F1 and the Super Bowl, our brand was on full display,” he said. “Our proximity to Allegiant Stadium, the F1 track and, of course, the T-Mobile Arena afforded us the opportunity to expand our reach during these city-wide events,” he said.
Quarter Highlights
MGM Resorts reported consolidated net revenue of $4.4 billion during the fourth quarter of 2023, a 22% year-over-year increase, according to its earnings release. Operating income was $419 million compared to an operating loss of $2 million last year. Consolidated adjusted earnings before interest, taxes, depreciation, amortization and restructuring or rent costs reached $1.2 billion.
Consolidated net revenue for full-year 2023 reached $16.2 billion, up from $13.1 billion in 2022. MGM Resorts' operating income was $1.9 billion, up from $1.4 billion the year before. Consolidated adjusted EBITDAR amounted to $4.6 billion.
MGM Resorts’ fourth-quarter net revenue for its Las Vegas properties, excluding the now-sold Mirage, was $2.4 billion, a 10% year-over-year increase, Chief Financial Officer Jonathan Halkyard said. Operations in Las Vegas skew toward the higher end, with approximately 80% of its Las Vegas Strip adjusted property EBITDAR coming from luxury properties.
“Interestingly, this year's revenues from our luxury properties increased mid-teens for the quarter in the year, representing approximately 90% of our absolute, top-line growth,” he said. “This further highlights the prominence of the higher-end segments in our business here in Las Vegas.”
Fourth-quarter adjusted property EBITDAR increased 3%, or $29 million, year over year, Halkyard said. Margins were about 36% in the quarter, coming in within the expected mid-30s range.
For the regional properties, excluding the sold Gold Strike Tunica, revenue was down 7% year over year with adjusted property EBITDAR dropping $64 million, or 22%, in the quarter. Approximately $60 million of that loss was attributed to MGM Grand Detroit and MGM Grand National Harbor, which were disrupted by a strike and some high-end play not returning. There were also some lingering challenges from the September 2023 data breach as some promotional offers were not available to customers for the first half of October.
MGM Resorts has officially launched its partnership with Marriott International to make its properties available through Marriott’s Bonvoy loyalty program, Hornbuckle said. All of MGM Resorts’ properties will be available to book on Bonvoy by the end of the first quarter.
In Macau, MGM Resorts’ two properties ended the fourth quarter with all-time record adjusted EBITDAR, he said. Their market share was in the mid-teens in the year and continued to grow in January with the addition of 200 table games, a responsive operations team and reinvestment in amenities at both properties.
2024 Outlook
MGM Resorts’ business on the books, including both room nights and rates, is encouraging, Hornbuckle said. Las Vegas has a robust city calendar this year as well.
The partnership with Marriott should grow MGM Resorts’ transient segment as it will bring in a new customer base at a lower acquisition cost, he said. That should lead to higher rates and more spending on property.
The Mandalay Bay Convention Center renovation is nearly complete, and the company is poised to benefit from an additional 100,000-plus group room nights on the Las Vegas Strip, Hornbuckle said. The company will leverage its branch office network to drive customers to its resorts in Las Vegas as it expects further recovery of international inbound flights, which are only about 75% recovered from Asia.
MGM Resorts plans roughly $600 million in capital expenditures for maintenance and improvement projects at its domestic properties, Halkyard said. Major projects will focus on luxury-oriented offerings, including the remodeling of the Bellagio Hotel & Casino tower suites, the Cosmopolitan tower penthouse and the MGM Grand main tower rooms.
The regional property outlook anticipates demand will remain stable, Hornbuckle said. The company is committed to consistently improving its operational model to sustain margins and foster a steady generation of free cash flow, he added.
MGM Resorts' regional portfolio historically has been highly defensive due to the high-quality assets it operates and the diverse set of non-gaming amenities they offer, he said.
In the first 45 days of 2024, MGM China Macau benefited from a Bruno Mars concert at the MGM Cotai, he said. Demand has grown for the MGM Cotai and MGM Macau for the Chinese Lunar New Year. Looking out into the year, the Macau government has set a target of attracting 33 million visitors to the region, a 17% increase year over year.
The Macau properties will focus on implementing strategic adjustments to their casino floor and room offerings to optimize yield, prioritizing the needs of mass and premium mass clientele and actively driving international tourism, he said.
MGM Resorts has started the liquefaction countermeasures for its new resort casino development in Osaka, Japan, he said. The company will maintain its trajectory to begin preparatory construction efforts in 2025 for a 2030 opening.
In New York, the request for proposal process is underway, he said. The company expects to submit its full application for a gaming license to the government by the middle of 2024 with a decision expected shortly after.