The major casino operators on the Las Vegas Strip got a small pop in share prices today, following an investor conference at the Global Gaming Expo (G2E) yesterday in Las Vegas.
Dow Jones Newswires reported that comments made by the CFOs of MGM Mirage (NYSE:MGG), Mandalay Bay (NYSE:MBG), and Harrah's Entertainment (NYSE:HET) suggested a return to growth. Oestricher also cited the Nevada Gaming Control Board in stating that Strip revenues grew 19.2% in June.
After two years of stagnant operations, it appears casinos on the Las Vegas Strip are starting to show the gravity of its attraction. And that gravity is not gaming itself. Two weeks ago, Mandalay Bay reported that its second quarter was boosted not by gaming, but both by higher occupancy rates and ADRs (prices) at its hotels.
In recent years, Las Vegas has faced several issues, namely terrorist attacks, SARS, and the war in Iraq. But the continued development of gaming outside of Nevada has also been a cause for concern. Although travel has declined, Las Vegas is also competing with Native American tribes and riverboat casino operators to satisfy the gambling itch of casino patrons closer to their homes.
Tribal gaming in California in particular has been a thorn in the side of Nevada. Moreover, companies such as Harrah's, Ameristar (NASDAQ:ASCA), Argosy (NYSE:AGY), and Isle of Capri (NASDAQ:ISLE) have lessened the need for gamblers in the Midwest and South to make the trip to the Strip.
But it's apparent that the attraction to the Strip is no longer the gaming itself, but the hotels and fantasy worlds that encompass it. At Mandalay Bay, for example, gaming accounted for only about 28.9% of its revenues on the south end of the Strip during the second quarter.
And that gravity will only grow stronger as the Strip competition grows. Every attraction brought there is another reason to visit Las Vegas rather than stay at home. Look for a further boost when Wynn Resorts' (NASDAQ:WYNN) Wynn Las Vegas opens in the spring of 2005.
You can reach Jeff Hwang at [email protected].
