More resort fees at MGM; Sands Bethlehem sold?

It was show time for the big boys at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum, starting with MGM Resorts International, which had to get started by explaining why fourth-quarter numbers had been “coming in well below investor expectations.” Despite that, MGM posted a record amount of convention-related business in 2016, although if you thought MGM had more hotel rooms on the Las Vegas Strip than it could possibly use, think again. Execs said “the [Donald] Trump travel ban resulted in a little glitch in late January, but business is back to normal.” Reading the tea leaves, J.P. Morgan analysts see another round of resort-fee increases, probably toward year’s end. As one analyst put it, room revenues “at core properties are still not at prior peak, but resort fees do help quite a bit.”

As for Strip gaming revenues, MGM execs basically said they’re maxed out, as “domestic casino patrons have a lot of closer options” (several of them owned by MGM). The company also noted wistfully that it was still optimistic that the [your city here] Raiders would come to Las Vegas. Looking outward, MGM reported slot play to softer than anticipated at MGM National Harbor (more high-end slots will be the answer) but table play was surpassing expectations. Expenses were higher than budgeted but — hindsight being 20/20 — such an exceptionally prestigious rollout could be expected to break the bank. As Penn National Gaming is learning to its distress out a Hollywood Jamul, you only get one chance to make a first impression.

February revenues in Macao took everyone by surprise, being much stronger than anticipated. MGM management is sitting back and waiting to see whether this growth is sustainable. Most of the growth is still expected to be on the mass-market side. As analyst Joseph Greff wrote, “While MGM acknowledges there is always policy risk, it is tough to stop people from moving money out of China.”

* Las Vegas Sands stole its own thunder with an e-mail to employees that Sands Bethlehem might be on the verge of a sale. “Sands Bethlehem has a potential buyer. The sale is not imminent and there is a lot of work that still needs to be done before a sale is final,” disclosed the company with unusual candor. (This might be the deal to which Pinnacle Entertainment alluded.) Company spokesman Ron Reese tried to quasi-retract Sands Bethlehem President Mark Juliano‘s remarks but this genie will not be easily re-bottled. “Guards union consultant George Bonser said that all along, the guards were worried about what could happen if they were successful in their six-year battle to unionize [at the property],” reports The Morning Call. Did Sheldon Adelson react with a hissy fit and put the place on the market?

Perhaps that’s why Sands didn’t have as much to say to analysts, although it disputed the convention wisdom that Parisian is taking business away from its other Macanese properties. It is looking beyond the immediate area for players, making “a concerted effort to grow its database outside of Guangdong, as players outside of that province tend to stay and play longer.” Sands also tried to be hopeful about the renewal of its concession, since it “considers itself to have been a good corporate citizen.”

As for Japan, Sands would like to be in a city that already has a substantial hotel inventory, the better to support its convention business. It is prepared for a somewhat glacial approval process, with construction beginning in 2019 and opening possibly as late as 2025. Adelson had no complaints about Singapore “though it is tough to grow a lot from current levels,” Morgan analysts wrote. As for Vegas convention bidness, Adelson is as bullish as MGM, noting that in addition to its room inventory, it’s an affordably priced market compared to the competition.

* Last at bat was Wynn Resorts. Outgoing CFO Craig Billings got to take a farewell lap, reporting that VIP levels in Macao are hitting levels not seen in three or four years and the junket operators are in healthier financial shape. The company “continues to see benefit from certain sectors in the China economy doing well, and players are having longer and more frequent gaming sessions.” Management also expressed confidence as to being on the right track at Wynn Palace. By far, most of the presentation was devoted to Macao. Steve Wynn seems to be in a nascent state of thought with regard to Japan, where the market could be smaller than initially thought. His lieutenants predict “fierce” competition but are “confident in [Wynn’s] product and believes it fits well with the Japanese cultural appreciation for high quality, service, and precision.”

Management also seems to be creeping forward with Wynn Paradise Park, feeling that it could get occupancy levels from 83% to 90% if Wynncore had more convention space to offer. (No mention of the animatronic King Kong, it seems.) Wynn maintains it is “comfortable” with the $2.4 billion (a 20% budget increase) that Wynn Boston Harbor is costing — resulting in less retail and necessitating more casino — and has let 90% of the contracts for the property.

* Now that Hard Rock International has bought Trump Taj Mahal, can a return to Atlantic City of former Borgata President Joe Lupo be far behind? Lupo, currently hanging his hat at Seminole Hard Rock Casino Tampa is an old Boardwalk hand, as is Hard Rock CEO Jim Allen. The Taj could also be a catspaw in Allen’s continued pursuit of a Meadowlands casino. In the meantime, it’s out with Donald Trump’s tacky theming and in with a rock-and-roll motif. The musical chairs on the Boardwalk may not be over. Glenn Straub‘s commitment to Revel/Ten seems to change with the day, as he continues to tangle with New Jersey bureaucracy, and would-be casino developer Bart Blatstein has been paying top dollar for land that would link his Showboat to Revel. (Showboat is deed-restricted from having gambling but Caesars Entertainment could really use the cash it could get in return for lifting that fatwa.) So a larger picture appears to be emerging from the Taj sale, but just what it will be is as yet unclear.

* That will o’ the wisp, high-speed rail from Las Vegas to the Center of the Known Universe (Victorville, California) has raised its head again. For no apparent reason, XpressWest released a report predicting 11 million round-trip passengers paying $115 apiece when the route is fully built out to Palmdale in 2035, generating $300 million a year. Consultants for the rail project expressed (no pun intended) confidence that it could draw away drivers and air passengers. The question of financing was simply begged, although CEO Tony Marnell hinted at benefiting from President Trump’s vision of infrastructural expansion within the U.S. Considering that XpressWest has no known backers and keeps missing start dates, it may take presidential patronage to get it past the starting point. We hear that Harry Reid is going to turn lobbyist and he was an XpressWest booster during his senatorial days, so we’ve probably not heard the last from Old Sixty Votes.

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