Investments in its Las Vegas properties coupled with the opening of its long-awaited MGM Cotai have executives at MGM Resorts International confident 2018 will be a strong year.
LAS VEGAS—Years of work and planning are coming to fruition for MGM Resorts International, executives said during the company’s fourth-quarter and full-year 2017 earnings call.
“MGM has undertaken a remarkable transformation, aligning all of our brands into one global entertainment brand,” Chairman and CEO Jim Murren said Tuesday during a conference call with analysts.
The result is a disciplined, unified view of strategy, he said, which creates one common approach to guest services and values.
Murren noted the fourth quarter was challenging, but he said 2017 ended on a strong note.
“We think that 2018 is going to be a very strong year for our company based on what we see here in Vegas and in Macau and in our regional properties,” he said.
Although the MGM Cotai in Macau, China, opened this month and not during the fourth quarter, MGM executives and analysts were keen to talk about the much-delayed opening.
This property is a game-changer in the market, Murren said, as thousands have already visited as it opened just in time for the Chinese New Year. Murren believes there are many more catalysts to drive further traffic and profitability at MGM Cotai, such as the later opening of its mansion and five junket operators to support its VIP business.
At this time, only 900 of the property’s 1,390 rooms and suites are available for guests. The remaining rooms are expected to open in the spring.
Between the MGM Macau and the MGM Cotai, Murren said the company continues to see strong customer loyalty in the region.
“We’re excited about the opportunities they offer us,” he said. “We think we’re very well-positioned for the market in terms of the type of product the customer is looking for. We’re confident we’re able to build market share.”
“That speaks to the power of our brands and the resiliency of our strong and nimble operating model,” he said.
During the quarter, revenue per available room at MGM Resorts’ Las Vegas properties decreased 4.9% year over year, according to the company’s earnings release. However, RevPAR for its Las Vegas properties increased 2.4% year over year in 2017.
Murren said continued strong interest in Las Vegas both from consumers and developers helps keep the market fresh and resilient even in the face of difficulties. He noted Kirk Kerkorian, the founder of what would become MGM Resorts, understood this is what would grow the market to the benefit of everyone.
“He encouraged others to invest in Las Vegas, and together the location would grow, and MGM would benefit,” he said. “We are excited about the future because of the collective investment we and others are making.”
MGM Resorts continues to grow in Las Vegas, Murren said, citing its expansion of the convention center at the Mandalay Bay, its T-Mobile Arena, the expansion of the convention center at the Aria Resort & Casino Las Vegas as well as its expansion of the MGM Grand Las Vegas and its transformation of the Monte Carlo Resort and Casino into Park MGM Las Vegas and NoMad Hotel.
All of the construction has been disruptive, he said, but they’re seeing immediate customer demand as new venues open.
The first quarter has been a challenge, Murren said, referring to the lack of the Conexpo-Con/Agg convention as well as the Consumers Electronic Show shifting a week. However, the Super Bowl and the Chinese New Year have provided strong business at MGM Resorts’ properties, he said.
“Despite concerns about some of that calendar shift and corrections more broadly, we feel good about the U.S. economy and very positive about our forecasting ability for the balance of the year,” he said.
The fundamentals of business are sound, Murren said, and the company continues to see healthy levels of bookings. Corporate meetings and convention business, along with the 2018 event calendar, remain strong.
MGM officials project 2018 RevPAR for the company’s Las Vegas Strip properties will increase between 2% and 4% year over year.