MGM Mulls Midweek Vegas Casino Closures as Q3 Revenue Tumbles 66%

  • The operator could start closing some Vegas Strip casino properties in mid-November 
  • MGM Resorts saw revenue drop 66% year on year, with Vegas earnings down 68% to $481m
  • Hornbuckle observed a "sequential improvement" in all markets despite a marked decline
  • Encore announced midweek closures earlier this month as Vegas casinos continue struggling
MGM Grand Casino and lion statue on the Las Vegas Strip
MGM Resorts representatives have confirmed the company is considering closing some Vegas Strip properties midweek as the operator continues to struggle post-COVID-19. [Image:]

Closures could start mid-November

MGM Resorts officials have confirmed that the company is considering closing some of its casino properties on the Las Vegas Strip during the middle of the week, according to reports from the Las Vegas Sun (LVS).

During the casino operator’s Q3 earnings call, MGM CEO Bill Hornbuckle confirmed that certain amenities, towers, and brands could face closures starting mid-November. He said:

We’re going through an exercise, we’re doing it now, about what do we keep open and what do we close.”

A company representative later explained to LVS that any potential closures would likely be restricted to midweek operations.

The move comes as the casino operator struggles to mitigate losses imposed by the COVID-19 pandemic. For Q3 2020, it saw a 66% drop in revenue year-on-year, with revenue totaling $1.1bn. MGM attributed this to “restrictions related to the pandemic.” Net revenue for its Las Vegas operations fell 68% compared to 2019, generating $481m.

Overall dismal quarter, some signs of recovery

All of MGM Resorts’ properties resumed business activity during the third quarter of 2020, with the last facility opening its doors on September 30. However, the operator’s Q3 report still shows the detrimental impact of post-COVID-19 casino occupancy and travel restrictions.

MGM’s operating loss was $495m for the quarter, a significant shift from operating income of $238m in the prior year. As a result, total net loss also increased dramatically to $535m from a loss of $37m in 2019. Despite this, the casino-resort company ensured its domestic liquidity position remains strong, totaling $4.5bn.

signs of stability and recovery”

Despite the decline in revenue year-on-year, Hornbuckle observed “signs of stability and recovery” in the third quarter, adding: “We saw sequential improvement in all our markets and several of our regional properties.”

Although MGM reported significant losses in its Las Vegas revenue, MGM China saw the largest decline. Net revenue fell by 94% compared to 2019, posting $47m. A decline in VIP table games revenue, which dropped 92% to $54m, is the likely major culprit.

Continued troubles for Las Vegas

Local authorities permitted the Las Vegas Strip to reopen on June 4 after months of COVID-19 forced closures, but casinos in the region have struggled with health and safety limitations since.

Credit rating agency Fitch Ratings Service believes the area’s casinos will still be in recovery through 2024. It attributes its prediction to Las Vegas’s reliance on air travel, out-of-state visitors, and conventions.

August visitor figures for Las Vegas were down 1.8 million compared to February, according to data from the Las Vegas Convention and Visitors Authority. Midweek hotel occupancy was also down to 34% from 83% six months prior.

Earlier this month, the Encore at Wynn Las Vegas announced it would close on several days owing to a lack of customer demand. The property is now open at 2pm on Thursdays and closes at noon on Mondays. Wynn Resorts said it has not yet concluded how many employees will suffer furloughs because of the changes.

MGM Grand, Park MGM, and the Tropicana recently announced they are laying off 1,172 employees. Tropicana’s assistant general manager, Mike Thoma, described the layoffs as “sudden, dramatic and beyond our control.” In August, MGM Resorts let go of 18,000 of its US employees previously under furlough during the pandemic.

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