Shooting weighing on MGM revenue

Mandalay Bay lags with slow recovery

Shares of MGM Resorts International plunged as much as 10 percent Thursday morning after management said it is taking longer to recover from the Oct. 1 shooting than anticipated.

MGM shares fell $3.04, or 8.6 percent, to close at $32.29, wiping away about $1.7 billion of market capitalization. It is the biggest drop in months for the casino operator.

Mandalay Bay is not turning around as fast as expected, MGM Chief Executive Officer Jim Murren told

Wall Street analysts during a conference call Thursday to discuss first-quarter financial results. The Oct. 1 shooter fired from a Mandalay Bay suite into the crowd at the Route 91 Harvest festival.

“This is a property that is undertaking a tremendous challenge,” Murren said, and it “has lagged behind what we had predicted in terms of its performance.”

The property’s first-quarter revenue declined

$16.3 million, or 6.3 percent, to $245 million. Occupancy fell 6 percentage points to

MGM

85 percent, the second-lowest among MGM’S Strip properties after low-end Circus Circus.

Mandalay Bay accounts for

8.5 percent of MGM’S net revenue, making it the fourth-largest property in its portfolio. With about 2 million square feet of meeting space, Mandalay Bay hosts many of the city’s largest conventions.

The property had a convention cancellation in February and several smaller meeting cancellations, Chief Operating Officer Corey Sanders said during the conference call. Demand for meeting space at Mandalay Bay around the first anniversary of the shooting is “challenged,” he added.

While Mandalay Bay caters mainly to convention attendees, some leisure tourists are also “electing to stay away” from the property, Sanders said. Murren said some Mandalay Bay guests, as well as Monte Carlo guests, are choosing to stay at competitor properties at the moment.

‘Brutal’ construction process

MGM is carrying out a $550 million overhaul of the Monte Carlo as it rebrands the outdated property into the more upscale Park MGM. However, Murren said the work is causing much more disruption than management anticipated.

Heavy equipment could be seen in front of the doors earlier this year as dozens of construction workers

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company to burden itself with a new construction project.

Japan would be one of those extraordinary opportunities. Murren reiterated MGM’S interest in building an integrated resort with a consortium there.

Looking ahead

The company expects full-year Strip revenue per available room

— a key industry metric — to grow a maximum of 3 percent this year, down from an earlier forecast of 4 percent.

Management blamed the cut on the slow Mandalay Bay recovery, the Monte Carlo construction and the canceled Alvarez-golovkin fight. April table hold was also worse than expected, they said.

However, 2019 is shaping up to be strong with a better convention calendar and a faster pace of bookings.

Contact Todd Prince at 702-3830386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.