MGM Resorts (MGM) and Caesars Entertainment (CZR) stand as the New York Yankees and Boston Red Sox of the casino world. The two companies tower over their Las Vegas rivals, battling for the same customers and endlessly trying to one-up each other.
During the pandemic, however, each of the two rivals became almost sympathetic to the other. No celebrity residency, new restaurant, or over-the-top entertainment experience could counteract the impact of the pandemic on Las Vegas tourism.
Trade shows were canceled, mask mandates were implemented, and while outright closures were brief, both MGM and Caesars had a period where they simply could not operate. Now, more than a year into the pandemic, both companies have continued to struggle as a return to normal has been relative.
The Consumer Electronics Show, for example, returned with a live show/virtual show hybrid in 2022. That event, which usually fills Las Vegas' many hotels and casinos. attracted only about 30% of its usual in-person attendance.
It has been a muted recovery for both Caesars and MGM but some new comments from the CEO of one of the two rival companies should give shareholders of both some encouragement.
MGM Resorts International.
Las Vegas Still Faces a Long Road to Recovery
MGM Chief Executive Bill Hornbuckle did not try to pretend the past quarter had marked a turnaround or a complete return to normal. But during his remarks on the company's earnings call, he did explain the operating environment MGM (and by extension Caesars) had to deal with in the fourth quarter.
"January, which typically relies more heavily on group business in Las Vegas, saw significant headwinds driven by groups mostly looking to postpone until later in the year," Hornbuckle said.
"Cancellations, while elevated, were mostly concentrated in a very short term with limited impact beyond March. CES in January was the most visible event this year with attendance down approximately 70%. Despite the tougher January, we're happy to see Covid cases again on the downswing across the broader U.S."
That's a realistic read on the fourth quarter, but the CEO also threw out a slight reason for optimism, which he followed up on.
MGM Sees Brighter Days for Las Vegas
Hornbuckle noted that conditions seemed to be improving rapidly and he shared some news that suggests sunnier skies are ahead:
"Cancellations are declining and group lead volumes are normalizing. Forward hotel book has 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. Furthermore, our weekends have remained very strong."
And while the MGM call happened on Feb. 9, Nevada Gov. Steve Sisolak actually repealed the state's mask mandate on Feb. 10. That makes Hornbuckle's optimism seem grounded in reality and he also offered some encouraging numbers.
"In fact, this past weekend, the city had the East-West Shrine Bowl, the NHL All-Star game at T-Mobile Arena, the NFL Pro Bowl at Allegiant Stadium, Garth Brooks at Dolby Live at Park MGM, and a pay-per-view fight in the Michelob Ultra Arena at Mandalay. Our Strip hotels ran 91% on Friday and 98% on Saturday," he said.
"This upcoming weekend, we expect a very strong Super Bowl turnout."
Two good weekends don't mean that Las Vegas tourism has recovered, but it's a positive sign for both MGM and Caesars. Hornbuckle also pointed out that Las Vegas will host both the Grammys and the NFL draft over the next few months.
"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 added.
