MGM Resorts’ Las Vegas revenue, earnings fall as room rates decline

MGM Resorts International reported a 2 percent decline in Las Vegas Strip revenue to $1.95 billion for the third quarter, while segment adjusted earnings before interest, taxes, depreciation, amortization and rent fell 12 percent to $531 million, according to SEC filings. The drop came as average daily room rates fell 8 percent to $218, driving a 6 percent decline in room revenue to $622 million. Revenue per available room also fell 8 percent to $193, though occupancy held steady at 89 percent.

Casino revenue rose 8 percent to $488 million, helped by stronger table-game and slot-machine results. Executives attributed the mixed results to pressure on leisure travelers, higher transportation costs and lower room pricing rather than a broad decline in casino or convention business.

"We experienced an increase in mix from the leisure customer over the hot summer months, which resulted in pressured rates against similar occupancy that we had last year," Chief Financial Officer Jonathan Halkyard said during a Wednesday earnings call. CEO Bill Hornbuckle said the company continued to see strong casino activity, convention business and corporate demand, while higher airfares and gasoline prices weighed on travelers' budgets.

MGM estimated airline pricing to Las Vegas was about 45 percent higher in the third quarter than a year earlier. Hornbuckle also pointed to record-high jet fuel prices in September and shorter booking windows, adding, "Las Vegas has been hurt more than most," citing weakness in Canadian and international travel.

Executives were more encouraged by early fourth-quarter trends but cautioned it was too early to determine if the summer slowdown had bottomed out. "October right now is looking a lot more like July," Halkyard said, describing the progression of room rates through the quarter. Hornbuckle said October's event calendar and convention activity were helping, and the company expects November to benefit from Formula One and other major events.

Sources: Las Vegas Review-Journal