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

MGM Resorts International’s Las Vegas operations reported lower revenue and profits in the third quarter as declining room rates offset stronger casino results, though company executives said October was showing signs of improvement.

Strip revenue fell 2 percent year over year to $1.95 billion for the three months ended Sept. 30, according to public filings with the U.S. Securities and Exchange Commission. Segment adjusted earnings before interest, taxes, depreciation, amortization and rent fell 12 percent to $531 million.

Casino revenue rose 8 percent to $488 million, helped by stronger table-game and slot-machine results. But room revenue declined 6 percent to $622 million as average daily room rates fell 8 percent to $218. Revenue per available room, an industry measure that combines rates and occupancy, also fell 8 percent to $193. Occupancy held steady at 89 percent.

Company executives attributed the results largely 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.

Bill Hornbuckle, president and chief executive officer of MGM Resorts, 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, which made it harder to predict demand.

“Las Vegas has been hurt more than most,” Hornbuckle said, citing weakness in Canadian and international travel.

Executives were more encouraged by early fourth-quarter trends, although they cautioned that it was too early to determine whether 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. July rates were roughly flat to slightly lower year over year, while August and September saw larger declines.

Hornbuckle said October’s event calendar and convention activity were helping, but the company still needed relief from high fuel and airline prices. MGM also expects November to benefit from Formula One and other major events, while sales teams are working to replace convention business that normally rotates out of December.

Contact David Danzis at [email protected] or 702-383-0378. Follow @AC2Vegas_Danzis on X.