Over in Las Vegas, the iconic Strip is receiving a facelift after two long-time mainstays are leaving and opening up new renovation and growth for their former competitors. Per a recent article, according to a Las Vegas-based gaming analyst, the recent closures of two significant properties on the Las Vegas Strip will likely benefit the largest casino operators, Caesars Entertainment and MGM Resorts International. These two giants, which collectively oversee 16 casino hotels and five non-gaming hotels, stand to see substantial economic gains from the shuttering of these two resorts. More specifically, this pertains to the Tropicana Las Vegas in April and the impending closure of the Mirage on July 17.
In this report, SBS will be going over the latest gaming notes coming from Las Vegas and also some additional thoughts and information regarding gaming in Sin City.
The closures will significantly reduce the number of available hotel rooms on the Strip per the LVRJ report, which is expected to drive up average daily rates (ADRs) and subsequently increase revenue margins for existing operators. John DeCree, director of equity research at CBRE Group Inc., a commercial real estate firm, highlighted in a July 2nd note to investors that Caesars and MGM are “best positioned” to capitalize on this situation. Their strategic advantages include ample room inventory, prime center-Strip locations, and greater appeal to “price-sensitive” guests. The Tropicana had 1,467 hotel rooms, while the Mirage currently boasts 3,044 rooms. Together, these closures represent a 4.9 percent reduction in the Las Vegas Strip’s main corridor hotel room supply, according to DeCree.
Also noted in the article, among the two properties, the Mirage’s shutdown is anticipated to have a more significant impact. CBRE estimates that the Mirage had approximately one million occupied room nights, generating $596 million in revenue and $169 million in earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) in 2023. “This represents significant underlying demand for the Las Vegas Strip that will need to find a home,” DeCree wrote in an article in the Las Vegas Review-Journal. He believes that Caesars and MGM, with their substantial room inventory, particularly in the mid-tier asset class on and around the center Strip, are well-positioned to absorb the displaced demand from the Mirage.
Noted in the article, MGM, which controls 37,243 rooms on the main resort corridor (40.4 percent of the supply), could see an additional $69 million to $102 million in annualized EBITDAR, based on CBRE’s analysis. Caesars, with 20,630 hotel rooms on or near the Strip (22.4 percent of the total supply), could potentially generate an extra $31 million to $49 million in incremental EBITDA. This is by leveraging the displaced demand from the Mirage, DeCree noted. While Caesars and MGM are expected to benefit significantly, the CBRE analysis also notes potential challenges. Given their already high occupancy rates, large-scale and peak weekends could strain room availability. As a result, DeCree suggests that budget-conscious travelers might turn to The Strat, which could see a boost in occupancy. Conversely, high-end guests are likely to prefer Wynn’s two luxury properties.
Noted also in the article, Wynn could gain anywhere from $8.7 million to $31.4 million, while Golden Entertainment, the parent company of The Strat, could see an increase of $2.5 million to $4.5 million in EBITDAR from the Mirage closure. Moreover, the CBRE analysis notes that since Caesars and MGM “already have high occupancy,” large-scale events and weekends could put a strain on their availability. As such, DeCree believes The Strat could see a boost from budget-minded travelers while higher-end guests will likely flock to Wynn’s two luxury properties.
Per the article, Reno-based Caesars could potentially generate $31 million to $49 million of incremental EBITDA. This would be “by capitalizing on the displaced demand from The Mirage,” DeCree noted. Of the two properties, the Mirage’s closing is more likely to “move the needle” in terms of opportunity for other operators.
“While there are many variables that could impact our analysis, we see a clear benefit for all Strip operators with more customers chasing fewer rooms and ultimately driving higher (average daily rates),” DeCree said. Of course, with the new shakeup of these older resorts, one could surmise there could be other changes in the future with different resorts changing ownership over time. For the time being though, this appears to be the most significant real estate shake-ups until the Mirage and Tropicana are repurposed.
For those looking for even more insights and information related to gaming news coming from Sin City, make sure to tap into the awesome array of info at SBS which contains this and more. Of course, for even more notes and news from the topic covered here, make sure to peruse the online Vegas sportsbooks guide which goes over a variety of great information related to the area. Moreover, if you are looking to maximize your wagers, make sure to peruse the best bonus betting sites rundown where you can find a ton of great info. This includes a catalog of the latest and greatest welcome bonus offers. Finally, if you are someone who is always on the go, make sure to check out the best betting apps breakdown which goes over the nuances of mobile betting and how it might make sense for you.
About the Author
As a devout aficionado of sports, Chris Boline has carved a career within the athletic realm. A skilled scribe, he boasts a decade-long portfolio that encompasses coverage of the NBA G League, the Los Angeles Chargers, football and basketball across the country. Beyond his professional pursuits, Chris is deeply invested in his community and dedicates his leisure hours to serving on boards, collaborating with community organizations, and cherishing the company of loved ones. CURRENTLY Business Development and freelance sports writing RESIDES IN Reno, NV EDUCATION University of Nevada BS and MBA EXPERTISE -Sports writing proficiency in: NFL, NBA, UFC, boxing, golf, and some motor sports -Topical news -Promotional and marketing ideas/updates -Business development Summary Chris Boline serves in a business development sales capacity as his day job. He has previously held sales/marketing positions with The Applied Companies (TAC), KTVN 2 News and the NBA G League’s Reno Bighorns, affiliate of the Sacramento Kings. He is a Reno native and is a member of various community boards including the Nevada Sagebrush Alumni Chapter, NCET and the College of Business Alumni Association (COBAA). Chris graduated from the University of Nevada in 2015 with a bachelors in management and economics and also earned his MBA from Nevada in 2023. More about Chris: Past president of the College of Business Alumni Association (COBAA) 2022-23 Two-time honoree for University of Nevada Alumni Chapter of the Year (Nevada Sagebrush Alumni Chapter, 2017 & COBAA, 2021) 2021 NCET award for Professional Services Organization of the Year with TAC Northern Nevada Human Resources Association 2020 Best Places to Work-Northern Nevada, Second Place with TAC 2016-17 Reno Bighorns MVP from the Sacramento Kings The Nevada Sagebrush editor-in-chief 2013-15 Associated Collegiate Press 2015 Four-year Non-daily Newspaper Pacemaker honoree University of Nevada, Reno College of Business Dean's List honoree (5x) from 2011-2015 Nevada Press Association award for Best Sports Column – Community in 2015 Education
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