Caesars Entertainment (CZR) – Get Caesars Entertainment Inc Report and MGM Resorts International (MGM) – Get the MGM Resorts International report A more and better approach to the Las Vegas Strip. Both companies have a variety of properties that cater to different levels of clients.
For example, MGM has Excalibur and Luxor to reach low-end customers, while MGM Grand, Mandalay Bay, Bellagio and Cosmopolitan are on the high-end. It also has New York New York in the middle. Granted, the company doesn’t rank its resorts, but it’s fair to say it offers hotel rooms at a variety of different price points at its casinos.
Caesar took a similar approach. It has its iconic Caesars Palace with the more exclusive Nobu Hotel as a hotel-in-hotel concept. It has the low-end attributes of Bally’s (soon to be redesigned under the Horseshoe name) and Flamingo. In the middle, it offers Harrah’s, Link, Paris, Cromwell and Planet Hollywood.
These are not all casinos owned by MGM and Caesars, but both companies hope to serve a wide range of customers.
Wynn Resort (WYNN) – Get the Wynn Resorts, Limited reportThe company that operates its self-proclaimed casino hotel and adjoining Encore Resort Casino has instead opted to focus more on high-end customers.
However, the company made it clear on its first-quarter earnings call that it will continue to invest in Las Vegas properties.
Wynn invests through pandemic
Wynn Resorts CEO Craig Billings talks about how his company is slowly recovering from the pandemic as Las Vegas.
“It is encouraging that the strong momentum in March continued into the second quarter, and our forward bookings show no signs of slowing down, with our booking pace improving significantly from pre-pandemic levels [average daily rates],” He said.
“Everyone on the call now knows that Las Vegas as a market has experienced a rapid rebound over the past few years. We’ve certainly been the beneficiaries of that. But we’ve also benefited from our efforts over the past few years.”
Billings said the company has been recovering from the pandemic, not only because the market has improved, but also because Wynn has been investing steadily.
“Even in difficult times, we invested in our people and our products. We opened Delilah. We completed the renewal of the lounge near the Lake of Dreams. We opened Casa Playa, we remodeled the rooms in the Wynn Building, ‘ he pointed out.
That’s a promise the CEO wants to continue.
“We look at every inch of this market-leading property and ask ourselves, ‘How can we make it better? How can we make it more rewarding?’ It’s a dedication to our craft that I couldn’t be prouder of , which is what drives lasting results,” he added.
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There’s still a lot to come at its Las Vegas properties.
“We spent $96 million in the quarter, primarily on room remodels and theater renovations in Las Vegas,” said Chief Financial Officer Julie Cameron-Doe.
“We still have about $50 million to $60 million for the room remodel, which should be completed in June. We have about $55 million to $65 million for the theater remodel, which should open in the fall.
“Furthermore, in terms of maintenance [capital expenditure], our annual revenue in Vegas is about $75 million to $85 million. “
Control costs, luxury experience
On the earnings call, Cameron-Doe explained how the company manages its expenses. She also outlined how the company’s operations in Las Vegas are recovering.
“Overall, our hotel occupancy rate was 77% in the quarter, 62% in January and 91% in March,” she said.
“It is important that we remain true to our luxury brands and continue to compete on product quality and service experience.”
Cameron-Doe made it clear that Wynn is focused on profit, but also wants to make sure guests don’t see any cost cuts.
“The Las Vegas team did a great job controlling costs without negatively impacting the guest experience, with adjusted property Ebitda margins of 36.1% for the quarter,” she said.
Operating expenses per day excluding gaming tax “was $3 million in Q1 2022, approximately $160,000 per day lower than Q1 2019 levels due to lower headcount and broad base in areas that do not impact customer experience cost efficiency.
“We remain committed to maintaining a cost structure that properly balances margins and our stringent service standards.”
Despite the pandemic, Wynn has positioned itself as a high-end property and has been able to keep its prices at (or above) historical levels.
“In terms of ’19, we continued to grow significantly. In terms of sales, we were in step with sales in ’19,” said Brian Gullbrants, president of Wynn Las Vegas.
Wynn offers an average daily rate of about $400 per night for its hotel rooms.