MGM Resorts continues to improve in Q1 even though it still posts losses amid growing consumer interest.
Recovery Begins at MGM Resorts International
MGM Resorts International has been affected by the COVID-19 pandemic, just like any other casino and hospitality company operating in the physical world. Yet, for all the setbacks, the three-month period ending on March 31 showed signs of improvement, with the operator reporting a higher consumer interest, even though revenue was down 27.1% YOY to $1.65 billion.
The reason MGM Resorts outlined in its financial update was the closures that kept properties off-limits for customers who were missing as travel was paralyzed for several months. However, 2021 is already looking up with travel restrictions lifted, capacity limitations nearly gone, and vaccination rates up.
Las Vegas Strips resorts, including MGM Resorts’ own operations, should do well in Q2. Bellagio and MGM Grand generated a total of $544.8 million in net revenue, down 52.0% YOY. Breaking down results by gaming vertical, table games posted a 35% drop while slots saw an 8% decline.
The hospitality side of the business also suffered from room revenue plunging by 62.7% in Q1, understandable in the context of declining occupancy, which see-sawed from 88% in 2020 to just 46% in 2021.
Net revenues stood at $711.3 million for its regional operations segment. Elsewhere, MGM China saw a 9% increase in net revenue ending at $296.4 million, boosted by the VIP segment.
Consolidated Losses Won’t Stop Recovery
MGM’s consolidated operating loss over the period stood at $246.7 million. Commenting on the company’s finances, MGM Resorts International CEO and president Bill Hornbuckle said that progress had been made:
“We are pleased with the meaningful progress we’ve made on multiple fronts this quarter. Consumer demand strengthened at our domestic properties, and the significant changes we’ve made to our operating model have positioned us to capitalize on the recovery.”
MGM Resorts International CEO and president Bill Hornbuckle
In outlining a strategy for the next period, Hornbuckle explained that the company had outlined a “tangible path” to bringing conventions and entertainment back to Las Vegas and beyond. Hornbuckle noted the company’s commitment to the digital segment in order to drive deeper customer engagement through the company’s flagship brand, BetMGM.
BetMGM continues to retain a strong foothold in the iGaming and sports betting worlds online in the United States, Hornbuckle noted. BetMGM is projected to be the second-largest online gambling operator in the country in the next few years, and the brand intends to be live in 20 states before 2021 is out.
BetMGM has hit $163 million in revenue during the three months, or up 90% compared to the entire 2020, a significant milestone for the digital unicorn. BetMGM chief executive Jonathan Halkyard said that the goal ahead is to create value for shareholders as well as to continue the brand’s momentum and expand further.
BetMGM is operated through a joint venture between MGM Resorts and Entain, previously GVC Holdings. Earlier this year, MGM Resorts International tried to buy Entain, but the company turned down the offer, pointing out that MGM seriously undervalued its assets, and the offer fell through.