Las Vegas casinos, especially those serving higher-end customers, could be in for a good summer, if Nevada’s all-time April record for gaming revenue is any indication.
Driven by Las Vegas, the $1.24 billion in gaming revenue reported Wednesday by the Nevada Gaming Control Board jumped 7% year over year, with a strong showing for locals casinos, in addition to properties along the Strip and in downtown.
Analysts are encouraged by the results that also showed 3.8% more people visiting Las Vegas in April and convention attendance up 36%. Visitation is up 4.1% for the year.
Chad Beynon, an analyst for Macquarie Equity Research, sent a note to investors Wednesday, saying April’s results, bolstered by $666 million on the Strip driven by an easy hold comp for tables and slots, keeps Strip operators in position for continued gaming-revenue growth in the second quarter. He expects non-gaming amenities, however, to be the main driver of growth.
Beynon pointed out that operators noted some consumer fatigue at the lower end during first-quarter earnings calls, while strength at the high end remains status quo.
Beynon added that MGM Resorts International remains confident that it will grow EBITDAR this year, with rates pacing ahead of last year for the second through fourth quarters and strong group bookings. Caesars Entertainment was clear that volumes are healthy, with second-quarter occupancy of about 98% and room rates 8% to 14% higher.
In his outlook following April’s result, Beynon said they’re increasing their second-quarter Strip gaming-revenue-growth expectations.
“We expect 2024 Strip gross gaming revenue to moderate, but see further growth in non-gaming, given the programming from sports, entertainment, and a strong convention calendar,” Beynon said. “Further, we maintain our bias toward the high end, as we believe the high-end luxury consumer continues to have a willingness to spend, while lower-income consumers may be feeling the pinch. In this environment, we prefer operators with higher-end exposure, namely Wynn.”
In outlining April, Beynon cited Strip baccarat volumes of $660 million, a 10% year-over-year increase, while hold came in about 12%, below the long-term average of 14%. Overall, table-game revenue grew 9%, while slot revenue grew 7%, despite handle being down 4%.
“We note that April was a tough calendar comparison, with two fewer weekend days year over year, while we estimate the broader U.S. regional casino gross gaming revenue decreased about 5% year over year on a same-store basis,” Beynon said.
Barry Jonas, an analyst with Truist Securities, pointed out that the Strip gaming win of $666 million was the lowest monthly total thus far in 2024. He said that after visiting Las Vegas in May, he remains positive about the Strip for the rest of 2024, with room rates stable on tough comparisons and a more competitive market among locals casinos. Jonas continues to monitor the Durango Casino & Resorts in southwest Las Vegas for cannibalization of other properties.
“Given Nevada Gaming Control Board data and commentary from our recent trip, we suspect some cannibalization of the market from Durango, as well as higher promotional activity in the market affecting some operators more than others,” Jonas said.
Brendan Bussmann, managing partner of B Global, called the April revenue numbers “solid” and is optimistic about what’s coming. “As we head into a slower season and continued economic pressures, we still need to be mindful that there may be challenges ahead. But revenue should still remain good as we head into summer,” Bussmann said.
