Question of the Day - 02 August 2022

Not only does the common person seem to be able to afford it, they’re paying it.

A snapshot of Las Vegas Strip room rates by J.P. Morgan analysts showed that in some cases, rates increased exponentially over the go-go year of 2019. Even on average, recent midweek rates were up 32% and weekends 71%. Venetian/Palazzo was up 40% on weekdays and 125% on weekends. 

It was a similar story at Wynn/Encore, 11% higher midweek and 117% loftier on the weekend.

Though MGM Resorts International’s myriad properties weren’t so day-of-the-week schismatic, weekday rates at up 61% were coming dangerously close to 72% on Fridays and Saturdays.

The only mixed verdict was at Caesars Entertainment, which is trying to downsize its preponderance of Strip rooms. They were 4% lower midweek, albeit 62% greater on weekends. 

Nor do hotel-casinos have to be filled to the rafters to drive these kinds of numbers. You might imagine that occupancy must be 100% at the Venetian and Wynn for them to charge more than twice in 2022 than they did in 2019 on Fridays and Saturdays, but that's not always the case. 

Unfortunately for our purposes here, resorts don't break out weekly or even monthly occupancy averages, unless they want to hype next quarter’s numbers to Wall Street. We do know from just such a revelation that during the first quarter of this year when Las Vegas was going great guns (it's slowed down a bit since), Wynn/Encore averaged 91% occupancy. That number lumps weekdays and weekends  together, so the resort was probably sold out on weekends and slower midweek.

Venetian/Palazzo stopped reporting occupancies and room revenues a long time ago, as soon as the sale of the property to Apollo Management was announced (long before the deal closed). However, in the fourth quarter of 2021 as Vegas was making its big comeback, Credit Suisse analyst Ben Chaiken figured out that the megaresort was averaging an occupancy of 100%. In this case, the Venetian could charge whatever the market would bear and undoubtedly did so. 

During first quarter 2022, MGM’s Strip properties averaged 71%, then bumped up to 92% in April. 

As for Caesars, in the last three months of 2021, occupancy averaged 83% on weekdays and 94% on weekends, although there was a January dip to 75%, creeping back up to 80% in February. The upside was driven by 95% occupancy on weekends and the downside by 77% midweek numbers.

How do these rates compare to hotels elsewhere? According to HotelPriceReporter.com, between 2015 and 2019, global hotel occupancy rates ranged from 50% to 80%, covering all seasons. It's long been known that most hotels outside of Las Vegas would gladly accept occupancy rates of those inside.

While this may not be a wholly satisfying explanation, you can see from the numbers that demand is not what’s driving pricing at Caesars and MGM, although that may be the case for Wynncore and Venelazzo.

One thing's for sure: Las Vegas room rates have gone through the roof. We tried to book a Venetian stay for Global Gaming Expo in mid-October, only to find that prices had quadrupled since last year. It’s a seller’s market these days and the hotels are milking it for everything it’s worth.