MGM Resorts Loss Vegas In Trouble
Las Vegas is in huge trouble. I don’t say that lightly nor do I take any amount of joy in reporting the news. The truth is COVID-19 has torn through the city’s tourism industry and the damage continues to mount. While many of the famous Vegas landmarks are now reopen, people simply aren’t showing up in large numbers.
Over the past couple of months I have been out walking the Strip and filming videos for our YouTube channel. It has been a pleasure to do, but the Vegas I am filming just isn’t the same as the one before. There is of course the virus hanging over everyone’s head, but something else is different as well. I wonder if things will be the same when the dust settles.
MGM’s Bad News Is Vegas’ Bad News
No matter what is happening here in Vegas and how you feel about it, the news isn’t good. A couple of weeks ago Las Vegas Sands (owner of Venetian & Palazzo) announced a $1B second quarter loss. This comes as casinos are now permanently laying people off too. For example, MGM Resorts just told entertainment and sports employees to expect to lose their jobs permanently at the end of August.
MGM Resort Earnings Report for 2nd Quarter 2020
Speaking of MGM Resorts, their earnings were just released and it isn’t good. Here is what they had to say, “As we look ahead, we believe the long term fundamentals of our business and the broader industry remain intact. However, the near term operating environment will remain challenging and unpredictable as COVID-19 case trends, health and safety protocols, and travel restrictions continue to heavily impact our business.”
The numbers for MGM Resorts are quite ugly. Let’s break them down:
- 91% decrease in net revenue compared to the prior year
- $1B consolidated operating loss compared to operating income of $371M in the same quarter of 2019
- A net loss of $857M compared to net income of $43M in the same quarter of 2019
- That’s a loss of $1.67 per share compared to earnings per share of $.08 in the same quarter of 2019
You can find even more info about their financials and 2nd quarter losses in their press release.
Will MGM Resorts & Other Casinos Survive?
At this point it isn’t a shock that many casinos may not survive this. One needs only to look at my abandoned casinos of Vegas video to see that there are still a lot of closed properties. Thankfully though MGM Resorts is in a fairly stable position. With $4.8B in cash or cash equivalents plus over $8B in liquidity they seem to be prepared to weather the storm. They do have a significant amount of debt, but at least for now that shouldn’t hinder their ability to move forward.
How Did MGM Resorts Vegas Strip Properties Do?
As mentioned above MGM Resorts as a whole (including regional & international properties) saw a 91% decrease in net revenues. That’s because to start the quarter all of their Vegas Strip casinos were closed and by the end many were still not open.
Here are some interesting facts about MGM’s Vegas Strip casinos in the 2nd quarter:
- Net revenues were down 90% to the prior year quarter at $151M
- Table Games revenue was down 90% as well
- REVPAR (Revenue per available room) was down 57.2% to the prior year quarter
Yeah it’s bad and things aren’t much better with their regional casinos (revenue down 90%) or their China operations in Macau (down 95%).
MGM Resorts Loss Vegas In Trouble – Bottom Line
MGM Resorts and just about every other casino operator is going to face huge challenges as they try to clean up from the mess of COVID-19. What that means in Vegas is a long slow recovery with far fewer employees. There simply is way too much capacity now (with even more rooms coming online in the next year) and who knows when things will ever get back to normal.
What do you think of these results? Are they surprising? How long do you think it will take Vegas to recover? Let us know in the comments below.
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[…] MGM Resorts lost $1 Billion last quarter […]
I too hate the resort fees (and similar fees) that many hotels across the country are now charging. I feel like they lower the room prices to get you in, but get the money back in ridiculous fees. And how is a hotel in the middle of the city a ‘resort’? Granted, some properties do offer many amenities, but not enough to support the extra fees. Why am I now paying for the ‘gym’ and ‘pool’ when I didn’t 10yrs ago? And it seems like there is no standard criteria to claim the property as a ‘resort’; so any facility – whether good or bad – can charge these fees. UGH!!! Tell me exactly what I’ll pay IN ADVANCE!!
Agree, with most comments here, Vegas is no longer a bargain for the casual vacationer. I can pay current Vegas room rates, resort fees, parking fees, anywhere. Why should I come to a minimally operating Vegas, when I can get a similar experience without many of the “fees” and with bargain rates for rooms, in other destination vacation locations?
I took my son (who just turned 21) to Vegas for the first time in March. We stayed at the Bellagio because I wanted him to experience the glitz and glamour of Vegas. We actually only bet once on one sport while in Vegas. Low and behold we bet on the NBA basketball game that was cancelled and set the shut down crisis in motion. We had a great time and walked about 35 miles (per the app) over the 3 days we were there. All of the resorts had people wiping everything down and there were automatic dispensing hand sanitizers everywhere. Masks were not recommended or required at that time. I booked the trip through SWA Vacations and joined the military appreciation offer through MGM. Thank you to MGM 🙂 . I will say, I was shocked when I checked out to find the resort fee was owed. I guess I didn’t read the fine print. Shame on me. The food prices are also quite high compared to the Las Vegas I remember back when I was at Nellis AFB. in the mid 80s. I get inflation exists. But, the low price of food was one way of getting people into the casino to drop gambling dollars. Perhaps I’m old fashioned and living in the past. Hey Vegas, drop the price of food in your casinos if you’re taking money out of my pocket in resort fees. Just a thought. Good Luck coming back. I love Vegas as an entertainment goldmine.
The resort fees are low on the Gaming companies worry list. They are a nuisance but if that keeps you from going on a vacation when things get back to some level of normalcy then maybe it is best to stay home anyway. Room pricing is just a portion of what generates customers.
The hotels and casino are trying to not go out of business and have to shut down and layoff all their employees. It is a total disaster financially right now.
I think the Resort Fees are an even worse virus for Las Vegas. As I result, I have permanently immunized myself from Las Vegas.
Resort fees will not kill you – the virus can.
Vegas and the nation will not recover until there is a viable vaccine.
I’ll believe that MGM is serious about wanting to win back business when it drops those scammy, deceptive “resort fees”, and gets rid offall thd other “nickel and dime” annoyances like “service fees”, “drink fees”, and all the other add-on fees those insatiably greedy scammers have been implementing to fleece their “valued guests”.
Shawn blocks comments from coming in that make real sense the only wants to post liberal b******* that fits his agenda hope he has a miserable travel life from here on in “of course the coward won’t post this”
What are you even talking about? We don’t block any comments? If you post comments with hateful or ridiculous language (like this one wishing ill on me) sometimes we do delete them if they are causing issues. David I feel truly sorry for you that you would wish ill on me simply for trying to keep a positive tone here. You are free to share any thoughts as long as you can do so in a civilized manner without insulting. In other words if you can add to the conversation then go for it. This site is 8 years old and I have a long track record of allowing all types of comments. The truth is I’ve had people call my family all sorts of names. I’ve been insulted. I’ve seen my contributors harassed. Now someone said I should have a horrible travel life. Is that the type of stuff we should leave up on the site?
But again, we don’t block reasonable comments and I don’t care if people agree with me. There was no political viewpoint expressed within that article that I am aware of, but again feel free to leave your perspective as long as you can do it without harassing or insulting me, my staff or our other readers. I’m approving this to show you that there is no censorship here other than the censorship of indecency. And if you comment here wishing ill on me, my readers, my staff or anyone again I’ll delete any future comments as fast as you post them. And if you post thoughtful and respectful commentary your posts will come through on the site without any censorship. I don’t censor for ideas I censor disrespect and harassment. Like the kind of people who say I should have a miserable travel life.
David, I just checked the Spam, pending and trash folder for any comments from your email address or IP address but there is nothing in there. So not sure what you are talking about…
Maybe head outside and get some sunshine on your face pal. It could do you some good 😉
Unfortunately, what you describe happening in Vegas is a reflection of what’s happening in the entire economy. The U.S. economy just posted it’s worst quarter EVER:( Our country’s GDP has collapsed at a 32% annual rate, which is astonishing. Then, there’s the massive unemployment numbers. Unfortunately, this will affect everyone who isn’t in the top 5-10% of income earners in this country, which is pretty much everyone. This is not a typical recession, it’s a public health crisis that triggered an economic crises and it’s totally unprecedented. Sorry to be a such a downer. The bright side is, some industries could potentially climb out this relatively quickly, although the travel/hospitality industry likely won’t and it’s gonna take a while…
With the rise in Unemployment Nationwide and people losing their homes, automobiles, evictions, no one has the money to squander it in Las Vegas. Face the facts of survival, secure a place to live and have enough food to feed your family. Gambling and hotels are a luxury and we are no longer at that level. Seriously Las Vegas may never recover. Face the facts we are in the middle of a new world order, and this time Mother Nature is calling the shots.
I will not return until the resort fees are dropped.
We were in Vegas last weekend with comped 3 night stay at the Wynn and it dead. While walking around, it felt like 2009 when the market crashed ( was living in Vegas then) and no one was out having a good time. So sad.
I don’t own their stocks any more, but I’m surprised that weren’t actually making a lot of money to begin with.
I think until conventions come back it’s all trouble. I love Vegas, but they don’t make their money off me. They have to fill all those rooms during the week with conventions.
If Vegas properties (not talking just MGM specifically) drop the resorts fees, and increase the rates to make up for most of it, they’ll have transparency. But that might also mean a rate increase for upper elite members that normally get the fees waved (at least at Caesar properties). So would they comp more rooms or risk alienating upper elites?
I would love to know what percent of Caesar resort fees are waived. I’d imagine most of the MTM readers that are likely to ever actually go to Vegas are already Caesar Diamond (via Wyndham or whatever), and don’t pay the resort fees.
Yes! Drop the resort fees then we can talk. I live in Vegas and am sad to see the Strip being nearly a ghost town. Also CES going virtual next January won’t help either.
MGM might consider dropping resort fees as a first step. Price the rooms appropriately without deception. MGM advertises low priced rooms, but resort fees double the cost or more.
+1. Start with the basics like very prominently advertising an out-the-door price.