MGM Resorts Lays Out Plans to Reopen Casino Properties in Nevada
After releasing their first quarter financial report, MGM Resorts made it know as to how they plan on reopening their casinos in the state of Nevada. The company will most likely be reliant on drive-in traffic from other states as they to get back to business after the coronavirus outbreak.
As far as the revenue report was concerned, MGM showed that revenue was short around 30% while earnings were down more than 60%. The company would have seen a net loss overall if they had not completed big deals at the first of the year involving two properties in Las Vegas.
During an analyst call yesterday, CEO of MGM Resorts, Jim Hornbuckle, was asked about how the company plans on opening back up in Las Vegas once the governor gives the go-ahead. The governor’s most recent remarks seem to indicate that the casinos will not be back up and running at least through May.
According to Hornbuckle, the company plans on opening their New York, New York casino first. It is a simpler property to run as it has only 2,000 rooms. The Bellagio has also been considered because it is a high-end business of the brand.
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Once those two get back up and running, MGM would then take a slow approach to review the overall economics of opening. Most of the Strip properties owned by MGM need to reach thirty to fifty percent of their normal occupancy in order to generate the cash flow needed.
The CEO stated further that MGM gets around 50% of their business in Vegas from residents of surrounding states. This fact should help the casinos to see traffic until players are ready to start flying again. During the summer months, the drive-in traffic starts to peak so this might push the brand to open even more properties in the coming months.
MGM saw around 50% of their group bookings dropped once the pandemic grew but around half of that amount have already rebooked over the next year.
Like other gaming operators in Las Vegas, MGM relies not only on casino gaming. They have hotel stays of course but also non-gaming entertainment. The company plans on getting back to business with non-gaming amenities but on a small scale. They will not be hosting large gatherings, such as tens of thousands of people to watch a comedian or musical act.
It is still unclear as to if there are players who will be willing to travel to Las Vegas to play on the casino floors or enjoy dining, entertainment, etc. People are currently under a stay at home order and feelings seem to be mixed as to if the nation needs to get back to business. Of course people are hurting being out of work, but the other risk is potential death depending on how hard hit one would be after contracting the coronavirus.
Casinos are ready to get going but we could see empty gaming floors as players are just not ready to get back to normal just yet. Will casinos open and remain empty? Will operators offer special deals and incentives to lure players back in? For now, it is all a guessing game. We won’t really know how things will operate or how many players will visit the venues until areas like Las Vegas start to open back up once again.