LAS VEGAS (KLAS) — Like other casino giants, MGM Resorts is eager for what Formula One will bring to an already thriving business. The F1 race in November has rooms selling for quadruple the normal rate, and there are twice as many rooms sold than what’s typical this far ahead of the event.
But MGM has even more to look forward to with the Oakland Athletics set to move to Las Vegas in a brand new stadium surrounded by the MGM Grand, New York-New York Hotel & Casino and Excalibur Hotel & Casino.
The A’s will be “literally in our front yard,” MGM Resorts International CEO and President Bill Hornbuckle said Wednesday.
The A’s should translate to about 400,000 hotel nights every year for MGM, Hornbuckle estimates. Especially when you consider the parking situation, which will only encourage people to flock to the corner of Tropicana Avenue and the Las Vegas Strip so they won’t have far to walk to the stadium.
Hornbuckle and MGM CFO and Treasurer Jonathan Halkyard had lots to talk about in a second-quarter (Q2) earnings call Wednesday. Hornbuckle said, “Looking forward to the rest of 2023 and beyond, we are encouraged by the pacing of both Formula One and the Super Bowl and the announced relocation of the A’s, which will further solidify Las Vegas as the sports and entertainment capital of the world.”
The Super Bowl, now less than 200 days away, is already driving demand and higher hotel rates — three to four times normal rates, officials said.
And as they ticked through more positives — BetMGM profitability, a major partnership with Marriott and a record July at their Macau resort — MGM officials acknowledged there’s work to do.
Hornbuckle talked about work on a new contract with the Culinary Union. “The big thing that’s going to impact us is wage,” he said.
Pay adjustments for housekeepers will likely add to labor costs going forward but Hornbuckle remains positive, noting there hasn’t been a strike since the 1980s.
And workers are certainly listening as executives paint a rosy picture for investors. MGM is expecting Q4 to be an all-time record.
MGM reports consolidated net revenue in Q2 of $3.9 billion, an all-time record and up 21% over Q2 2022. Net income was $201 million. The company said it had free cash flow of $887 million for the six months ending in June.
In Las Vegas, net revenues of $2.1 billion in Q2 was comparable to 2022, and profits (EBITDAR — earnings before interest, taxes, depreciation, amortization and restructuring or rent costs) were down 6%.
In July, MGM announced an agreement with Marriott hotels that is expected to generate $60 million to $75 million annually when it hits its stride. The agreement has the potential to replace 5-8% of low-end room nights with a higher rate under Marriott, Halkyard said.
And BetMGM, the betting app that has developed since 2020, is expected to show profitability in the second half of 2023.
With all this cash coming in, Hornbuckle identified one place MGM might spend some of it. By the time the A’s play their first game on the Strip, the MGM Grand could use some attention.
“MGM is 35 years old and needs some love anyway,” Hornbuckle said. “We like to think our front door can be improved.” He also said the three resorts on that corner could be connected better.