First quarter revenues were down at one of Southern Nevada’s Big Six casino companies and the rebuilding and re-branding of one of its Las Vegas Strip properties may be to blame. MGM Resorts International reported net revenues of $2.1 billion on its first quarter earnings call last week. A number that was down one percent from the same period last year.
In fact, MGM Resorts CEO Jim Murren said the companies Las Vegas Strip revenues were actually down two percent compared to the first quarter of 2017.
MGM did manage to do better than the three to five percent drop it projected in its fourth-quarter earnings call. However, Murren said matching 2017’s numbers was impossible because of issues surrounding the ongoing rebuilding and re-branding of MGM’s Monte Carlo property into Park MGM.
Unlike anything MGM has done before
Murren said the project has been unlike anything MGM has done before and the organization completely underestimated the financial impact it would cause:
“It’s worth noting we’ve never undertaken anything like this before, and when it’s all said and done we will have literally changed every square inch of the property while keeping it open.”
According to Murren, the major issues at the new Park MGM have been a lack of vehicle access to the main entrance and direct pedestrian access from the Las Vegas Strip during the rebuild:
“It’s kind of a tough thing when you go to a resort and can’t drive up to the front door.”
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Murren added that MGM has also lowered expectations for the second quarter of the year.
This, as the Park MGM project continues and the Saul “Canelo” Alvarez-Gennady Golovkin boxing match scheduled for next month at T-Mobile Arena has been canceled. Plus, Las Vegas tourism continues to recover slowly following the mass shootings outside Mandalay Bay on October 1, 2017.
Southern Nevada’s Big Six casino companies also include:
Earnings have been down at most of the companies’ Las Vegas properties for a variety of reasons, including the slow rebound in tourism after the mass shootings.
However, Murren said the decrease in revenue at MGM is isolated to the factors he described. As a result, they should start turning around by the end of the year.
The Monte Carlo-Park MGM switch
In fact, he said the switch from Monte Carlo to Park MGM should be completed in December 2018. In turn, that will improve the outlook for 2019 substantially:
“It’s looking now like its more intended final product. We are finally coming to the completion on that at the end of this year.”
According to Murren, 90 percent of the rooms are already finished at Park MGM. Plus, amenities including restaurants and the sports book are already performing well:
“When we do release things to the public, we are seeing very high returns. It’s just been brutal in this process.”