Is Las Vegas Due for a Rebound?

Las Vegas Strip gaming revenue is up 5% over the past year and it looks like a recovery is under way. If the U.S. economy picks up steam and confidence returns to consumers, we should see steady growth for the next few years as well. 

MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (NASDAQ: CZR  ) need the increased revenue to reduce debt loads that are abnormally high. But the biggest need for increased revenue may come from the north side of the strip, where Wynn Resorts (NASDAQ: WYNN  ) and Las Vegas Sands (NYSE: LVS  ) are expecting Genting Group to build Resorts World Las Vegas. The single resort could eat up all of the area's growth by 2017, presenting a challenge for all gaming companies. 

Erin Miller sat down with contributor Travis Hoium to discuss the upside and risk of growth in Las Vegas. 

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  • Report this Comment On January 14, 2014, at 1:58 PM, berg80 wrote:

    I just wanted to say nice work on your MPEL call from Dec. 2. It is up 22% since you said it was over valued. Just the kind of outstanding analysis we've come to expect from you.

  • Report this Comment On January 14, 2014, at 5:28 PM, spokanimal wrote:

    Regarding your comment that "The Genting Group's (new development) eating up the area's growth by 2017"...

    ... It was short sighted of you to insinuate that resorts on the north end of the strip would be more heavily impacted. It's indicative of your need to gain more experience in the industry before shooting from the hip with comments like that.

    The "clustering" effect on Cotai should have given you a hint as to the fallacy of your comment.

    Currently, there isn't much to the North or West of Wynn to create a clustering affect for the resort, and given LVS's presence only one door closer to center strip than Wynn, it's fair to say that there's a minor negative clustering affect for LVS as well.

    The Genting development will change that by attracting large numbers of hotel patrons who, once they venture away from Genting's casino(s) will find Wynn and, to a lesser extent, LVS venues to be their most convenient, 2nd stop. Caesars and MGM venues would require getting in a car and DRIVING to them for a 2nd stop visit.

    So, when you insinuate that Wynn and LVS are more vulnerable to one of the "few", new Vegas resort developments that will sop up growth on the strip over the next 3 years... I've got to wonder where you dream this stuff up.

    Spokanimal

  • Report this Comment On January 14, 2014, at 5:40 PM, spokanimal wrote:

    One additional comment that harkens back long before you arrived on the gaming industry scene, Mr. Hoium:

    In the aftermath of the 9-11 disaster, It became apparent that Vegas was hugely impacted for those of us with a "contrarian" investment philosophy.

    In my years as a gaming analyst leading up to that event, I had acquired a healthy appreciation for the Business model being adopted by "Mandalay Entertainment Corp", which was eventually bought out by MGM... in 2004, I believe.

    Mandalay had greatly leveraged the "clustering" concept that I'm trying to help you appreciate to a greater degree. The critical mass the company had achieved via the monorail-linked, "Mandalay Mile", with 3 resorts each appealing to a different class of patron, was a big reason why MGM paid me so much for my shares in the "04 buyout... shares that I had acquired when Vegas was a ghost town in late 2001.

    Mandalay had further leveraged the critical mas of their clustering model with a magnificent Convention Facility, the idea for which was gleaned from the action-item visions of one Sheldon Adelson. The investment was a no-brainer in the $teens.

    I appreciate that your M.F. contributions are slowly improving, Mr. Hoium, and I have to say that they look good relative to the other neophytes who are writing for the fool...

    ... but as you can see... you're no Grant Chum, my friend.

    Spokanimal

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