Continuing JP Morgan‘s march through Las Vegas, senior analyst Joseph Greff met with Boyd Gaming CEO Keith Smith and CFO Josh Hirsberg. They seemed pleased, on the whole, marveling and the resilience of their customers, whose play was “amazingly consistent” no matter how many Covid-related mandates you throw at them. Downtown, they conceded was somewhat more of a challenge, given the lack of Hawaiian players. Spend per visitor, however, is above 2019 levels “which management attributed to a healthy consumer backdrop and a higher value customer coming through the doors.” This is some cooling-off in the regional markets, although Las Vegas locals and drive-in players remain stalwart. Boyd has even ceased marketing to low-value customers, what with Baby Boomers returning … albeit not yet at previous magnitude.
Management said it’s have trouble filling jobs, “noting that the shortage is somewhat limiting the amenities that can be offered.” That, in turn, is inhibiting revenue growth. Currently Boyd is at 60% of workforce strength compared to two years ago and “Surprisingly, the expiration of unemployment insurance/stimulus in some states has not resulted in people coming back to work.” Boyd is improving its profit margins by savaging marketing spending and relying less on full-time employees. (And they wonder why they’re having problems re-staffing.) Dark Eastside Cannery will remain so until January, possibly March. After all, it’s redundant to Sam’s Town next door, where business is “strong, but not overdone to level where additional capacity is needed.” A final bit of good news is that Boyd has gotten its leverage down to 3X equity or thereabouts, another sign of a company that rarely strays from sound business fundamentals.
Greff then paid court to the Roman Empire, bending the knee to CEO Tom Reeg. Like Boyd’s Smith, Reeg said business is strong and that customers are of a higher value than a year ago. Occupancy levels in Caesars Entertainment‘s resorts are expected to surge to 90%-plus in the third quarter, after hovering at 83% in 2Q21. This is because business travel is back, as evinced by more robust midweek bookings. Second-tier regional properties were described by Greff as “solid” while the destination ones “have more room to run.” Reeg sees this strength extending into next year, thanks to savings rate double the average, the proverbial pent-up demand and high consumer confidence. He’s pinning his Vegas hopes on the escalation of Caesars Forum and the return of midweek customers, who generated the most cash flow in the pre-pandemic days.
Reeg is understandably pleased with what’s happening on the Las Vegas Strip (the Venelazzo sale, the hawking of The Cosmopolitan of Las Vegas) as it plays into his plans for selling one Strip asset and getting a high return on it. What will go on the sale block and when remains exquisitely vague. But Caesars is confident it won’t lose any players, thanks to the pull of Caesars Rewards toward other Strip casinos. As for the digital sphere, Reeg said not to take monthly results into account but focus on the long game as regards online sports betting and i-gaming. The CEO likes the way company is positioned in terms of tech, market access and brand recognition as it makes its big digital push. “The company is closely watching Arizona, which last week launched and represents the first state that CZR was there with peers, on day 1,” Greff added. Reeg isn’t ruling out any digital partnerships but insists upon being compensated for the full value of both the Caesars brand and the database that comes with it. If that Strip sale ever happens, expect the proceeds (and they should be considerable) to be rolled into online ventures.
Gross gaming revenue in Massachusetts nosed up 8% in August to reach $92.5 million. The unsurprising leader was Encore Boston Harbor, netting $58 million for a 10% gain. Plainridge Park grossed $13 million, up 5.5% and MGM Springfield made $22 million, a 4% gain. It’s worth remembering that last August had two fewer weekend days than either 2019 or 2020.
Not even the presence of Slash‘s motorcycle on the Hard Rock Atlantic City casino floor could bring players flocking back last weekend. Our Atlantic City correspondent checked out the Hard Rock, Ocean Casino Resort, Borgata and the Golden Nugget. He reported that “There seems to be some slowdown in people overall. Perhaps they will start giving out comped show tickets, but not until their business slows down even more.” He adds, “I don’t understand why Harrah’s Gulf Coast casino chose Philadelphia as a charter departure city, taking some business from both their Chester and Atlantic City locations. I also don’t understand why they have charters to Biloxi during the hurricane season (send them to Laughlin for some real action).” Nor do we. Ocean, for one, noticed the slowdown and sent out a bevy of coupon offers (below).
Jottings: Troubled Crown Resorts could go belly-up, says an auditor. Due to multiple probes of money laundering (and other malfeasances), civil proceedings are viewed as “very likely,” along with significant fines. Let the circling of the vultures commence … Hollywood Morgantown has begun hiring, with a view toward an end-of-year opening. The $111 million “satellite” casino will have 750 slots and 30 tables …. South Africa‘s most venerable casino, Mmabatho Palms Hotel, is looking at a three-month shutdown after being ravaged by fire. Based on news coverage, we’d say that timeline is optimistic. The damage is remarkably extensive. The Mmabatho Palms was Sol Kerzner‘s first casino, for you history buffs.
This is confusing, they seem to be saying “midweek business is up”, but conventions are cancelling left and right… Reminds me of Monty Python’s Holy Grail, “Always look on the bright side of life…”
Whoops, I mean Monty Python’s Life Of Brian… Another classic…
This is the first time, anywhere, that I’ve seen that business travel is recovering. Just yesterday the Boston Globe reported that business travel is still dead.
Not surprising that the expiration of unemployment benefits hasn’t had people flooding to jobs. That was just about cruelty in certain states.