There was good news for hoteliers on the Las Vegas Strip today. Room rates for the second quarter and the first half of the third quarter average out to a 0% increase/decline from last year, following a -4% comparison in 1Q10. Unless one singles out Harrah’s Entertainment, the Big Four among Strip operators (Harrah’s, Wynn Resorts, MGM Resorts International and Las Vegas Sands) aren’t seeing the kind of worrisome, double-digit ADR plunges in 2010 that they experienced last year.
Though it’s supposedly not driving up room rates, convention business has become a much bigger part of Wynn’s business model, up to 17.5% of overall room sales from 12% last year. Sands is around 25%, by comparison, and says it expects to be up to a 30/70 convention/other room-occupancy ratio next year. According to a J.P. Morgan investor dispatch, Sands execs “noted that forward bookings for 2H10 and 2011 are increasing and pricing trends appear to be stronger, especially on weekends.”
Despite fears of cannibalization by City Center, MGM’s Mandalay Bay reported its second-best-ever month for convention bookings last June. Even with strong increases in the convention sector per se, it still remains a relatively small component of MGM’s Strip business model. In terms of ADR improvement, Wynn leads the pack, up nearly 15% from last year. Sands is also doing better than average, while MGM can’t seem to move the needle, being stuck at ‘slightly down from last year’ status. A distant laggard in the first two quarters, Harrah’s is only but a couple of percentage points off last year’s 3Q pace. It would be a gross oversimplification to treat such an improvement as purely the result of banning “resort fees,” but it’s clearly doing business no harm.
Throttle a cabbie, get a gaming license. Despite having inflicted bodily harm upon a Las Vegas cabbie and had another (unspecified) scrape with the law in Reno, the Nevada Gaming Commission decided that John H. Pohorsky is just the kind of guy it wants in the casino industry. Never mind that Pohorsky couldn’t keep his alibi for the Reno incident straight, nor that he’s merely promised to join Alcoholics Anonymous (although he plans to continue drinking), commissioners voted him through, 3-2. Even Commissioner John Moran, who didn’t believe what Pohorsky was saying, voted to approve the license.
Remember when Gary Loveman pitched a fit about his Nevada gaming-license investigation, calling it the worst experience of his life? Why does as respectable a figure as Loveman have regulators crawling up his sphincter if they’re going to give mulligans to the Pohorskys of this world?
I am glad to see Mandalay Bay’s convention business is doing good. Mandalay Bay is one of my favorite properties in Las Vegas. Because Mandalay Bay is at the far end of the “south” Strip I thought it might not be doing as good as some of MGM Mirage’s other properties but it seems like it is doing OK.
Steve Wynn is able to adjust to the tough times. Interesting that convention business is up to 17.5% of room sales now. Then, on weekends, he brings in huge revenue from EBC and Surrender plus XS and Tryst. I personally believe he is risking permanent damage to his reputation with EBC/Surrender clientele, but he’s got to do what he’s got to do. I wouldn’t stay at Wynncore on weekends now.