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.