MGM Resorts: COVID-19 restrictions hurt finances
Casino company reports $1B operating loss in Q2
LAS VEGAS – A sustained shutdown of MGM Resorts properties in the wake of COVID-19 contributed to a secondquarter operating loss of $1 billion, reports the Reno Gazette Journal, which is part of the USA TODAY Network.
That’s a steep drop from the $371 million in operating income recorded in the second quarter of 2019. Those figures refer to income or losses calculated after operating expenses such as payroll and equipment are subtracted.
“As we look ahead, we believe the long term fundamentals of our business and the broader industry remain intact,” said Bill Hornbuckle, who was named MGM Resorts CEO this week. “However, the near term operating environment will remain challenging and unpredictable as COVID-19 case trends, health and safety protocols, and travel restrictions continue to heavily impact our business.”
The owner of 10 resorts on The Strip reported net second-quarter revenues of $290 million – a 91% decrease. MGM reported a net loss of $857 million compared to last year’s $43 million in net income.
Nevada’s casinos reopened June 4 under new restrictions, including reduced occupancy, more space between gamblers and severely curtailed limits for meeting and convention spaces – factors that contributed to devastating second-quarter earnings, the company said.
On The Strip, MGM has opened Bellagio, MGM Grand, New York-New York, Excalibur, Luxor, Mandalay Bay, ARIA and Vdara. But Mirage and Park MGM remain closed.
The open properties reported $151 million in net revenue – down 90% compared to last year.
MGM’s earnings report revealed table games kept $142 million in revenue – a drop of 90% year over year. But the company highlighted several other factors that contributed to the company’s second-quarter dive:
i Continued travel restrictions in Macau (China)
i Restrictions on the number of table games allowed to operate in Macau
i Restrictions on the number of seats available at each table at both the company’s domestic and Macau properties
i Social distancing restrictions at all open properties in the U.S. and Macau
i Reduced number of slot machines
i Property capacity restrictions
i Limitations at venues and amenities
COVID-19 coverage in the media contributed to travel fallout that plummeted visitation numbers in Las Vegas, Hornbuckle said in an earnings call.
The second-quarter occupancy rate was 43%. Over the same time in 2019, it was 95%.
Las Vegas ‘in a world of hurt’
The disappearance of conventions in the wake of COVID-19 contributed to a second-quarter loss of almost $1 billion for Las Vegas Sands. The company lost $985 million – down 97.1% from last year.
The company recorded a net income of $1.11 billion in the second quarter of 2019.
The pandemic has transformed Las Vegas from a global destination to a regional gambling hub dependent on “drive-in” business, said Las Vegas Sands President and COO Rob Goldstein in an earnings call last week.
“We’re in a world of hurt here in terms of Las Vegas,” Goldstein said.
The company is optimistic about operations rebounding faster in Macau, China, but Goldstein said he is “pessimistic” that the convention and large group business will return to Southern Nevada before 2021.
Vegas passenger count down
Following the reopening of Nevada casinos on June 4, Las Vegas’ McCarran International Airport’s passenger count was back over 1 million travelers.
McCarran’s passenger count in June was 1,041,823.
It’s a significant improvement from May’s numbers when just 391,712 passed through the airport during the shutdown of gambling at the state’s casinos.
But it’s a 76.6% drop from June 2019, when the airport served more than 4.4 million travelers.