Macquarie Analyst Not Optimistic About Vegas Rebound This Year
A top Wall Street analyst has voiced doubts that Las Vegas will achieve a significant recovery in leisure and international travel before the close of the year.
LISTEN TO THIS ARTICLE:Chad Beynon, who covers Gaming, Lodging & Theatres at Macquarie, issued a report to investors on Monday suggesting that weakness on the Strip could begin affecting the broader local market. He noted that regional casinos continue to perform better than their Strip counterparts and predicted that third-quarter earnings for Caesars Entertainment, MGM Resorts International, and Wynn Resorts will likely fall short of consensus forecasts.
Related: Recent Las Vegas Slump Isn't Stopping New DevelopmentWhile Beynon emphasized that Las Vegas still has strong long-term fundamentals, he cautioned that demand from leisure visitors and overseas travelers may remain muted through year-end, even after three years of recovery since the pandemic.
He referenced August revenue figures showing the Strip pulled in $679 million, up nearly 6% year-over-year. The growth was primarily fueled by baccarat, where an 18% hold compared to last year’s 10% pushed table game revenue up 13%.
Third-quarter results also benefited from soft baccarat performance in 2023, leading to a 12% annual gain in table revenue through the first two months of reporting. Slot handle in August increased 2%, supporting a 3% year-over-year rise for the quarter overall.
Casinos away from the Strip reported solid momentum, with local properties up 3% in August and downtown venues climbing 8%. Beynon singled out Boyd Gaming as a likely outperformer, particularly in its Midwest and Southern markets, while expecting Red Rock Resorts to align with analyst projections.
Still, he warned that Strip sluggishness could eventually filter into the local market, especially as operators respond to early signs of economic strain with heavier promotional spending.
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Not All Gaming Analysts Agree
A different view was offered by John DeCree, director of equity research at CBRE. In his update to investors, DeCree argued that the local market remains stable, with five of the last six months posting gaming revenue growth. He projected this steady-to-moderate expansion will continue, supported by resilient local consumer spending.
He also pointed to possible tailwinds from federal tax cuts that will benefit tipped employees, overtime earners, and retirees. CBRE reaffirmed its buy ratings on Red Rock Resorts with a $65 target and Boyd Gaming with a $100 target.
DeCree acknowledged that visitor numbers to Las Vegas remain soft, citing a 6.7% year-over-year drop in August. Convention attendance also slipped 8%, leading to weaker hotel performance. Occupancy fell by 360 basis points, average daily room rates declined 7.1%, and revenue per available room fell 11.1% — the third straight month of double-digit RevPAR declines on the Strip.
Despite those setbacks, overall gaming activity has held firm. DeCree highlighted baccarat revenue soaring 51% thanks to favorable hold, along with steady growth in mass-market tables and slots. He stressed that the mass-market gains were impressive considering lower visitation levels.
Looking ahead, DeCree expects visitation to stabilize in the fourth quarter and into early 2026 as the convention calendar strengthens, though near-term challenges for leisure travel are likely to persist.
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