Viva Las Vegas Demand Trends, Analyst Likes Caesars, VICI Properties
For all the verbalize nigh in high spirits inflation and rising interest group rates potentially stoking economical contraction, Las Vegas Strip demand trends are far from pricing in a recession.
In a observe to clients on Thursday, Macquarie psychoanalyst Republic of Chad Beynon points come out that net searches for Las Vegas jaunt jumped 7% inwards August, edifice on gains of 5% inwards July and 3% in June. There are indications that momentum is carrying over into this month, supporting the research firm’s bullish outlook on Strip 144 gaming revenue (GGR).
The warm results through and through Aug and September gift us confidence inwards our GGR forecasts of $631m (+1% YoY) in August, $2.1bn (+1% YoY) in 3Q22, and $8.2bn for 2022 (+15% YoY, +24% vs. 2019),” wrote Beynon.
Further supporting the instance for Strip-oriented equities, Beynon acknowledges that piece Las Vegas visitation remains nearly 9% at a lower place 2019 levels, outlay per inspect is running just about 40% ahead of levels seen inward the endure year before the egress of the coronavirus pandemic.
Bullish on Caesars, MGM, VICI
In terms of specific stocks, Beynon said Macquarie’s upside Las Vegas ideas are Caesars Entertainment (NASDAQ: CZR), MGM Resorts International (NYSE: MGM), and VICI Properties (NYSE: VICI).
MGM and Caesars are the II largest operators on the Strip, piece VICI is the biggest landlord in the US casino center. The Bellagio operator derives nigh 47% of its revenue from the Strip, spell Caesars gets 45% of sales from the area, according to Beynon.
Importantly, all trey names, specially MGM and Caesars, are signs that convening business is bouncy back. Beynon noted a long-term rebound in group and meeting business sector is a catalyst for Strip operators.
That jibes with comments made earlier this hebdomad by MGM CFO Jonathan Halkyard at Deutsche Bank’s 30th Annual Leveraged Finance Conference. He said there’s “real enthusiasm” for reverting to face-to-face conventions, which is seen inwards the operator’s bookings extending well into 2023.
Other Las Vegas Demand Catalysts
As noted above, Strip visitation levels remain infra what was seen before the COVID-19 crisis, but a slew of upcoming marquise events in Sin City could exchange that for the better.
Longer term, we regard the yield of conventions and a strong sports/event calendar inwards the next mates of years (e.g., NCAA Men’s Division I basketball tourney games, Formula 1, Las Vegas Raiders and Golden Knights games, and the 2024 Super Bowl, among others) to supply some spirit level of keep for Strip GGR and non-gaming revenues,” added Beynon.
The F1 race, which takes place inward Nov 2023, could be an larger-than-life cash cow for Strip operators and the city. For example, MGM is believed to live constructing just the ticket and room packages for the rush that could go as high-pitched as $100K.