MGM Resorts International, in its first financial report since a gunman opened fire from one of its Las Vegas buildings and killed 58 people, said a short-lived wave of cancellations has ended and bookings are almost back to normal.
While the casino operator said its revenue from the Las Vegas Strip will drop by a low- to mid-single digit percentage in the fourth quarter, that’s primarily because of ongoing work in transforming the company’s Monte Carlo property to Park MGM, according to a statement Wednesday.
Investors responded to the bookings rebound by sending MGM shares up the most in more than a year. The Oct. 1 mass shooting became the worst in U.S. history when a gunman used his suite in an upper floor of MGM’s Mandalay Bay resort to open fire on concert goers before taking his own life. More than 500 were also wounded.
Chief Executive Officer Jim Murren said the company shut down all of its marketing citywide after the attack, and didn’t resume until the middle of the month. Cancellations by leisure travelers doubled.
“I’m happy to say that these cancellations progressively subsided by mid-October and our booking pace returned – remarkably returned to normalized levels almost immediately thereafter,” Murren said on a conference call with investors.
MGM rose 5.1 percent to USD33.06 in New York trading Wednesday. That’s the largest gain since March 2016.
The shooting was the latest in a series of attacks targeting concert goers, including the Ariana Grande show in Manchester, England, and a rock concert in Paris. Several marathons and concerts are scheduled for Las Vegas this weekend, part of the growing focus on entertainment over gambling.
MGM’s profit in the period that ended Sept. 30, a day before the shooting, fell to 26 cents a share, the largest casino operator on the Las Vegas Strip said. Revenue of $2.83 billion topped analyst estimates of $2.76 billion.
Revenue and profit could also be down in the first quarter, Murren said, but less so than in the current quarter. Any decline would be due to a lighter schedule of citywide conventions, rather than fallout from the shooting, he said. The Mandalay Bay, which accounted for 20 percent of the company’s cancellations, is open for business except for one wing of one floor, Murren said.
MGM China Holdings Ltd., the Vegas-based operator’s Macau unit, posted adjusted earnings before interest, tax, depreciation and amortization that dropped 21 percent from a year earlier to $118 million.
While MGM’s bookings for the Vegas properties are recovering from the shooting, the Macau property on the Peninsula may face challenges in the next few quarters, according to a Sanford C. Bernstein & Co. note Wednesday. While its new Cotai project is scheduled to open in January, it may not be able to compensate for the market-share loss of the Peninsula property in the short term, according to the note.
Galaxy Entertainment Group Ltd., another casino operator in Macau, reported third-quarter adjusted earnings of HKD3.5 billion, 31 percent higher than a year earlier. Earnings were boosted by its VIP segment, whose revenue expanded 34 percent.
MGM China rose 1.9 percent to HKD19.30 as of 9:45 a.m. in Hong Kong trading, and Galaxy shares advanced 1.2 percent. The Bloomberg Intelligence index of Macau casino stocks was up 0.6 percent. Christopher Palmeri, Bloomberg
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