Strong momentum for MGM as properties see ‘very healthy recovery’
MGM Resorts officials have confirmed that there is a “strong momentum” in its business and that its 2023 outlook remains bright, partly propelled by MGM China’s rapid return to profitability in the year-to-date.
MGM China was badly impacted by the Covid-19-related restrictions that saw a plunge in revenues by up to 44% in 2022.
Macau authorities remained adamant in their strict border measures last year, echoing Beijing’s strict zero-Covid-policy, resulting in the casino sector bleeding cash. This was coupled with the uncertainty surrounding the gaming concessions.
However, following the full reopening last month, the casino sector is also back to business.
In an earnings call with analysts, the gaming operator’s officials revealed that it has seen many guests returning so far this year.
In fact, in the quarter-to-date, MGM China’s combined properties are the highest earning businesses within the company, pushing its market share — in the single digits pre-pandemic — to 16%.
The mass piece volumes were 100% over its 2019 levels.
“Our room occupancy approached 100%, and our restaurant coverage actually exceeded 2019 Chinese New Year levels. This was largely due to all these non-gaming events and concerts that drew a lot of incremental visitors to us,” Hubert Wang, president and chief operating officer of MGM China, said on the call.
Also, Wang said that in January, on the gaming side, the group have seen a “very healthy, above market average recovery” in both mass and direct VIP segments.
“Our daily mass GGR was on par with the 2019 level for the month of January during Chinese New Year, and far exceeded last year’s Chinese New Year level, actually. And we are also encouraged to see that direct VIP segment in terms of rolling volume far exceeded 2019 level as well,” said the executive.
“It is also very encouraging to see the January run rate extend into the first week of February so far. So all in all, we are very confident in a solid and sustainable recovery of Macau market this year and beyond,” he added.
During the Chinese New Year, MGM China was making a little over USD5 million a day.
Macau had 451,047 visitor arrivals during Spring Festival, which was up 297.0% from the previous lunar new year, which fell in early February 2022.
During the Spring Festival holiday from Jan. 21 to 27, China saw nearly 2.9 million cross-border trips, up 120.5% year on year, and 308 million domestic trips, up 23.1% and back to 88.6% of the 2019 level for the same period.
Meanwhile, MGM Resorts CEO and president Bill Hornbuckle said that the calendar in March is positioned to have the best hotel revenue month in its history.
Hornbuckle said demand for upcoming events in Las Vegas is driving demand for its hotels.
Net revenues plunge 44% in 2022
In the gaming operator’s fourth quarter and full year 2022 financial and operating results, data shows that MGM China has posted net revenues of USD674 million in the current year compared to USD1.2 billion in the prior year, a decrease of 44%.
Also its Adjusted Property EBITDAR recorded loss of USD203 million in the current year compared to Adjusted Property EBITDAR of USD25 million in the prior year.
During the fourth quarter, net revenues of USD175 million were recorded compared to USD315 million in the prior year quarter, a decrease of 44%.
The current quarter was negatively affected by a three-day Covid-19 related property closure at MGM Cotai and was more significantly impacted by travel and entry restrictions in Macau compared to the fourth quarter of last year.
