MGM Resorts International could add a second resort-casino to the south end of the Las Vegas Strip. They are also working on a strategy that will attract more regional customers to Las Vegas. MGM chief financial officer Jonathan Halkyard spoke Wednesday to investors at Morgan Stanley’s Virtual Global Consumer & Retail Conference, where he made the revelation.
MGM Not Done With the Strip
MGM announced the September acquisition of The Cosmopolitan, the center Strip’s resort. Halkyard stated that the Strip’s energy has been shifting in that direction with T-Mobile Arena and Allegiant Stadium in that corridor. Halkyard offered some detail:
“That’s our neighborhood down toward New York-New York, Excalibur, Mandalay Bay and Luxor, MGM Grand, and Park MGM. The reality is — and not many people appreciate this — that there’s a substantial opportunity for our company to do additional development in that area if that’s something we think (is a good move for shareholders). There’s (sic) seven acres in front of the Excalibur. That’s equal to the entire footprint of The Cosmopolitan. I’m not suggesting we’re going to build a 3,000-room tower there, but that’s a significant development opportunity potentially.”
MGM chief financial officer Jonathan Halkyard
Halkyard pointed out that pedestrians have difficulty accessing the MGM Grand. He believes there’s a way to improve the connectivity over time.
Halkyard confirmed Wednesday’s appearance of omicron in California as the first case of the new COVID-19 variation. He said that it has not had an impact on bookings for tourists and conventions in Vegas, which are strong through 2022. The growing segment will make up for any reductions in patron spending in the next year.
Vegas Recovery Still Strong
Halkyard claimed that the industry’s resilience and performance are continuing to be strong. Strip gaming revenue rose by 30% in October compared with 2019, and casinos in other states are also showing strong growth.
Halkyard explained that the region properties are not experiencing the pre-pandemic level of 65-plus visitors with the same frequency as before. Although this older population is important in regional markets, it has not returned to the region as much in terms of frequency and visits.
Halkyard said, “I think a counteracting mechanism over the next several months will be the continued return of that demographic, which would more than offset any normalization and spend levels we’re getting from some of those rated and unrated guests.”
MGM expects its group, convention, and meeting business to continue to pick up. Halkyard said that the company sees the activity increasing in 2022, and by the end of 2022, getting at its historic levels. He added that the company is already seeing “record-breaking results” in the segment.
Halkyard compared Las Vegas’s recovery to Macau’s after-effects of COVID-19 and visitors from mainland China. They said they are cautious on how it will progress and expect it to be “bumpy” over the next six-12 months. “I am more confident in the return of the group, and meeting business to Las Vegas.”
Halkyard noted that, aside from group business and iGaming, sports betting and iGaming are the biggest financial and brand opportunities since the inception of riverboat gaming in Midwest thirty years ago.
He added, “It wasn’t too long ago that the vast majority of MGM guests were just visiting properties here in Las Vegas one to two times a year, and now we’re in a situation where we have eight regional businesses in major markets and greater connectivity between those businesses and our Las Vegas properties, and we now have BetMGM present in 16 states with online sports betting and five in iGaming. That’s millions of customers engaging with our brand almost on a daily basis — a huge change from what this company was a few years ago.”
Other States Hold Promise
New York offers a “significant opportunity for the company” with the possibility of having the Empire City Casino become a full-fledged, licensed casino with table games. Halkyard expressed his delight at the possibility of that in the future.
“Between our operations in Atlantic City and database for Las Vegas and of course our digital offerings, having a full-fledged brick-and-mortar casino in New York would be very appealing,” he stated.