Question of the Day February 8, 2016
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Q:You’re always posting whether gambling win was up or down, but what about non-gaming aspects, like total hotel take (including percentage of income from resort fees), etc.? With 130,000 rooms or so, is there a breakdown of total revenue that lists a number like $10 million to $15 million a day in room income, or whatever it may be?
A:While the casinos may be responsible for less of the total pie than in former times, gaming was always among one of several income streams for the typical Las Vegas resort, and revenues by department have long been reported. In fact, the Center for Gaming Research at UNLV recently compiled a study of Departmental Revenues among casinos with gross gaming revenues of $1 million of more, from 1984 to 2015, which highlights some interesting findings. For example:
- From 1984 to 2015, the percentage of revenue from gaming, statewide, fell from 62% to 43%, while on the Strip this contrast was even more stark, dropping to 35% from 59%. The actual figures involved were $2,941,428,012 in 1984 to $10,622,398,628 last year.
- In 1984, statewide the percentages were 61.95% gaming; 11.92% rooms ($566,156,219); 12.25% food; 7.64% beverage; and 6.23% "Other." By 2015, this had shifted to 43.2% gaming; 21.97% rooms (so almost double, percentage-wise, but up by a factor of 10 in absolute terms, to $5,403,398,618); 15.27% food; 7.01% beverage (which surprises us somewhat, given the expansion nightlife/daylife and the whole bottle-service scene, but then many nightclubs are owned and operated by third parties...); with $12.54% attributed to "Other."
Another source of general information is the Las Vegas Visitor Profile, an annual report compiled by the Convention and Visitors Authority, according to which in 2010 the average visitor spent an average of $79.64 on lodging; $256.82 on food and drink; $62.87 on local transportation; $122.80 on shopping; $49.28 on shows; and $7.21 on sightseeing. By 2014 this had seen some changes, both in absolute amount spent and on relative expenditure for various budgeted line items, with an average of $86.55 spent on lodging; $281.88 on food/drink; $68.83 on local transportation; $149.77 on shopping (a significant increase); $47.56 on shows; and almost double on sightseeing, at $14.49. Looking at these figures, the shift toward the amorphous "Other" catch-all category in the UNLV report could easily be attributed to the uptick in spending on retail, sightseeing, and transport costs.
Still, while statewide gaming figures are available, and beyond that breakdowns for areas like the Strip, Downtown, Boulder Strip, N. Las Vegas, etc., obtaining accurate numbers on a per-resort basis is tricky. Quarterly filings by MGM Resorts International, Wynn Resorts, Las Vegas Sands, Caesars Entertainment, and Boyd Gaming – all publicly traded – only fill in a part of the picture.
For instance, looking at the latest quarterly filing from MGM there are line items for "casino," "rooms," "food and beverage," "entertainment," "retail" and the dreaded "other." For Q3 2015 these categories broke down as follows:
Food & beverage: $397,332,000
Still, these figures are very raw, and while casino revenue for the same quarter the previous year is reported as $1,420,538,000, if reported side-by-side against the Q3 2015 figure, this doesn't show casino expenses for the two years, which are listed as $699,569,000 for 2015, compared with the significantly higher figure of $884,177,000 for the previous year.
Sticking specifically to room revenues, here's how the story goes for the same quarter for MGM Resorts International Las Vegas Strip properties:
Occupancy % 96% 95%
Rate (ADR) $141 $131
(REVPAR) $135 $124
We've never seen a breakdown of room revenues themselves, which would present a very complicated picture, since the resorts work with so many OTAs and other third-party vendors and affiliates. Resort fees have been explained/justified to us by more than one property as the only way in which they can make room sales a profitable proposition, since they're obliged to bulk sell at rock-bottom prices to the OTAs, hence it can be assumed that resort fees are included in MGM's reported room revenues. But that's just one company and many hotels are not owned by publicly-traded entities.
Furthermore, while gaming revenues are broken down by area, the same is not true of room revenues. So, while thanks to the LVCVA's stats we could tell you that last November there were 3,852,864 "occupied room nights" (and 149,086 available rooms), we can’t tell you how many were booked at the Downtown average nightly rate of $131.63/night versus at the Strip average of $121.77.
Additionally, according to Communications Manager Amanda Arentsen, the ADRs provided to the Authority by hotels and motels, do not include resort fees. So the effective daily ADR could be much higher than reported, depending on the magnitude of the fees, and would likely mean that the hotels' own reporting likely wouldn't tally with the LVCVA's stats, since one is reporting average revenue while the other is concerned only with nightly rates. Going forward, will mandatory parking fees be included in room revenues? Probably (and it would be logical), but those fees would not be included in room-rate reporting, since they will technically be a separate ancillary charge more likely to be filed under "Other."