Why Are the Big Casinos' Earnings Down?

Even though I don’t hear any of the casinos saying it … could customers’ dislike of ridiculous resort and parking fees be part of the reason several casinos are reporting bad earnings and lowering their estimates for the rest of the year? I personally go out of my way to not pay parking fees and I avoid properties with resort fees at all cost. Could there be enough of “me” out there that our voices are starting to be heard? I sure hope so!

Visitation to Las Vegas flattened in April of last year and, with the exception of two tiny upticks this spring, has remained down ever since.

The slippage hasn’t been calamitous: a percentage point here, a few points there. However, it suggests that something is affecting the Las Vegas market and not in a good way.

MGM Resorts recently told investors, “A softer citywide convention calendar is causing MGM and other operators to go after lower-quality, lower-spend guests to fill up mid-week,” according to JP Morgan stock analyst Joseph Greff. (And no, we wouldn't care to speculate what MGM might have meant by calling its midweek guests “lower-quality.” But you can!) MGM did report higher room revenues in the first quarter of this year, but that was accomplished entirely by dint of raising resort fees.

We mention MGM not only because it was the first company to institute the despised parking charges, it's also the one giving customers their best reasons to gamble closer to home. For example, MGM Grand Detroit is a Strip-quality property that happens to be in — and dominate — the Motown market. MGM National Harbor, across the Anacostia River from Washington, D.C., has been doing gangbusters business since it opened. Borgata far and away dominates the Atlantic City scene. And there’s no reason to believe the lucky streak will end with the opening of MGM Springfield in Massachusetts.

Casinos like these give players a reason to forego or even forswear Las Vegas when they can get the Sin City experience (at least in part) without having to jump on an airplane. The same could be said of tribal casinos, often built with the aid of Las Vegas-experienced firms, which now exceed the private sector in gaming revenues. There’s currently a kind of arms race going in the southern California market as a half-dozen tribal casinos are upscaling to lure the player seeking that Vegas vibe, led (in dollar terms) by Pechanga Casino Hotel & Resort. It and properties like it menace Vegas’ supply lines to the all-important Los Angeles and San Diego markets.

Regional casinos in the Midwest and parts of the South are doing better than Las Vegas this year, although there's also an undercurrent that worries the industry to the trend: They’re making more money off a smaller customer base. This pattern -- fewer players with (more) money to spend -- could also be discouraging Vegas tourism.

In light of all these and other micro- and macro-economic indicators, we're disinclined to entirely credit parking and resort fees for the air going out of the Vegas balloon.

On the other hand, they're clearly not helping and one company has even partly walked them back: Wynn Resorts will comp one day’s parking if you spend $50 on the property using your players card. Still, we hesitate to call it the start of a new trend, lower earnings or otherwise. As Anthony Curtis wrote in the July issue of the Las Vegas Advisor, "You could say that Wynn was the first to blink, or even that pressure from the free-parking policy at neighboring Venetian/Palazzo forced its hand." He didn't add, but we will here, that Wynn has been promoting hard since its founder, namesake, CEO, and Chairman resigned in disgrace. So we'd be a bit surprised if Caesars or MGM pushed out a similar bargain offer.

And we hold out even less hope on resort fees, which seem to be ratcheted up whenever times are tough. Frankly, we don’t know what it will take for Las Vegas to scale back or end that odious practice.

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[email protected] Aug-27-2018

Ostriches in Vegas?

We are some of those "middle weeker's" that spend less in Vegas? Maybe only a few hundred a day in gambling, but we shop, see shows, and eat every day so $500 a day is not uncommon. We are still unnerved by the 47 deaths last fall by a lunatic down on his luck. As long as most of the murder and mayhem stayed off The Strip and in the neighborhoods, it was o.k. with us.

[email protected] Aug-27-2018

No More Vegas

After 22 trips to Vegas staying in strip casinos, there will be no more. Resort fees and parking fees ended that. We now travel to casinos within our state of Michigan or to Indiana, Illinois, Wisconsin and Ohio. We can go more often on a much cheaper budget .

Rick Sanchez Aug-27-2018

I live here

As someone who lives here and avoids the strip at all cost I think it is starting to show that some people are done with all the fancy shows and high end dining. All the casinos around the country offer a better gambling experience these days.

Some people just want to gamble.

Deke Castleman Aug-27-2018

This in via email

"Fees, taxes, fees, fees, fees...all costs of doing business ... and a total turnoff for travelers! Why drive/fly all the way to LV, when there are loads of casinos 1-2 hrs away? I'm not going to waste my money for travel! I can think of eight casinos within 2 hours of me, and more slightly more distant. Too bad the big corporations haven't figured this out."

Lucky Aug-27-2018

Strip blues

I live in Los Angeles. Why go to Vegas, when Pechenga, Harrahs SoCal, etc, exist.  I go to gamble.  Playing live poker, dice craps, real roulette, etc., go to Vegas.  Anything else, stay in CA.  The machines in Vegas have gotten about as bad as they can get.  It think the maximum in Nevada is 85% house hold?  In CA, the Indian compact allows it to go down to 75% house hold. But with 3 or 4 casinos near Temecula, the competition causes more advantages, and  I find that at Pachenga, Harrah's, and the other casinos near San Diego all seem to have better slot machines than Vegas.  At least it feels that way, with people winning around you.  Do not see that in Vegas any more.  Why go there then.  Room prices are better, parking is free, (there is a "resort fee", but lower).  When Vegas wakes up and does not try to suck every penny out of you, from the casino to parking, the occupancy rates will go up.

Bryan Carr Aug-27-2018

Fees

I absolutely will not park or play at a casino that charges parking fees. Unfortunately, I do pay the resort fee since there are so few hotels that don't charge that fee. Our family was in Las Vegas in July for a week and when we wanted to go to the strip, we parked at the Miracle Mile shops. They got a lot of my business because they did not charge a parking fee.

Patricia Corwin Aug-27-2018

Fees, fees and more fees.

I pretty much agree with the previous poster who lives in LV yet avoids the strip at all cost.  I just relocated here from Ohio, but have no desire whatsoever to visit any casino on the strip, especially one that charges me for the privilege of parking in their lot/garage.  I, too, feel that some people just want to gamble, and it's getting harder to feel like you even have a shot at winning anything. The machines keep getting tighter and more fees for whatever are constantly being added.  Vegas is no longer the only game around, and people will go where they feel they're receiving a good bang for their buck.

Pat Higgins Aug-27-2018

Resort fees

Thank goodness for CE’s Diamond card where parking & resort fees are waved

Vickar Aug-27-2018

Demeanor

In addition to all the fees hotels charge including, early check-in?...late check-out?...really?, how could you not feel ripped off from the get go.  Take that pissed off poor attitude to any gaming venue and you will make mistakes and it will cost you money. Maybe that's exactly what casino management is hoping for. After all, you gotta make up those losses (fees) you incurred just by walking in the door.  Right?  Wrong!

Jennifer Opitz Aug-27-2018

Hard pressed

Vegas has always been our "go to" vacation since 2001. We have witnessed the rise and fall of so many things, and over the last couple of years the rise of fees, resort fees, parking fees, you're breathing in my casino fees and so many more have deterred us from even going on the strip unless we have show tickets. Even then, we find free parking and walk to the venues mostly as a matter of principle. There were a couple of casinos downtown that did not charge resort fees and now that has come to an end. Unless every tourist and local boycotted every property until they reduce or eliminate these ridiculous fees, the casinos will continue to charge us. Unfortunately the numbers for casino revenues are not plummeting, so the leeches will continue to suck the life out of every tourist and local that continues to stay and play in Vegas.

robert wolf Aug-27-2018

retired

We have been coming to LV for 25 yrs. We're CE diamonds and are treated great and would stay for a week. We gamble. There are casino's one hour away. The airlines used to be cheap. No more. Now you are treated like cramped animals. I'm 6'2",225 lbs and the seats just don't fit.

Dave Aug-27-2018

PILOT 53 S.D. CASINOS

I find it interesting you say the rooms are cheaper at the San Diego area casinos. i find them to be alarmingly high. a quick search for tonight (Monday aug 27th) comes up with: Viejas $149, Harrahs Rincon $128, Valley View $129, Pala $125, Pechanga $169. Vegas, even with resort fee and parking, is WAAAYYYY cheaper. i still go all the time, i just stay away from the strip. Very simple. The rooms being way cheaper, the food cheaper, free alcohol. You just have to be picky about where you go. Vegas is still a blast and i go to get away from San Diego. The Indian casinos are the most depressing places anyway. i should know, i was a dealer at Barona for 3 years. Vegas, you still get that excitement. Indian casinos, it is the same people coming every night complaining that they can never win. Ill keep going to Vegas, but i understand the complaints (believe me).

Andrew74 Aug-29-2018

Vegas Fees

I also have stopped patronizing properties who charge for parking. No way to avoid the resort fee, it's nationwide now. Have only been coming back to Vegas with the offers from Boyd and now that may be coming to an end! I think Vegas will always have visitation but it's best days are behind it. It will have to get really bad before paid parking even has a chance to go away. By the time they figure it out, Vegas will be the equivalent of Atlantic City.

Question of the Day - 27 August 2018

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