MGM Reports Record Revenue, Lackluster Profits for Q2

Bellagio, Cosmopolitan, and behind it Aria are the Las Vegas properties for MGM Resorts generating the most money and thus getting the biggest investments. But even still, F1 room rates are down. (Image: Ruslan Kalnitsky / Alamy)

Buckle up, Las Vegas news from MGM's second-quarter earnings report call was a fun ride!

In the Q2 press release, MGM Resorts CEO Bill Hornbuckle cheered positive financial reports from China and Las Vegas, a relationship with Marriott that’s exceeding expectations, and a robust meetings and convention business, due in part to a recent remodel of Mandalay Bay. 

Record-Breaking Quarter?

By the numbers, that meant record revenue of $4.3 billion for Q2 2024 – a solid 9.8% increase over last year’s second quarter.

The revenue growth was mostly attributed to a record-breaking quarter for MGM China.

The China division saw an EBITDAR of $294 million, which was a 40% revenue increase compared to last year. MGM attributed this primarily due to Macau finally lifting Covid-19 restrictions.

That revenue generated a net income, however, of only $187.1 million – a notable 6.8% drop from Q2 2023. 

Big Three in Vegas: Aria, Bellagio, Cosmopolitan

Revenue from MGM’s Las Vegas properties was up 2.7% to $2.21 billion.

The average daily hotel room rate (ADR) in Las Vegas was $248 per night during the second quarter. Occupancy for the quarter was an impressive 97%.

Like other casino operators reporting earnings, a common denominator has been an intensified focus on high-end customers. 

MGM executives refer to Aria, Bellagio, and The Cosmopolitan as its “Big Three” luxury resorts at the heart of the Las Vegas Strip.

Spending at Aria, Bellagio, and Cosmopolitan dwarfs Mandalay Bay, Luxor, and Excalibur.

“Our success in the quarter was underpinned by our luxury resorts,” MGM CFO Jonathan Halkyard said, “which are responsible for the vast majority of our top-line growth in Las Vegas.”

Thus, he noted, 75% of MGM’s 2024 US capital expenditure budget will be used on its luxury Las Vegas properties. Much of this money will be devoted to suite updates in all Las Vegas hotels.

Hornbuckle added that the company has spent over $1 billion on its properties over the last 3 years, with much of that “principally focused on the building we're in, Bellagio."

He also confirmed the company is still working on approvals to expand Bellagio. The company should have more information on this in time for its next earnings call.

And though there’s no timeline yet, Aria intends to update its main hotel tower next year.  

Meanwhile, Cosmopolitan has now officially been fully integrated with MGM Rewards, a process that took over two years but MGM execs believe should start showing immediate … um … rewards.

Marriott Bonvoy Guests Spending More

Last year MGM ended its national hotel partnership with Hyatt. After delays due to a cyberattack, the MGM Collection with Marriott Bonvoy launched earlier this year.

Halkyard credits this relationship for selling 410,000 rooms this year, 60% of which have already been enjoyed. 

Halkyard noted that these guests spend about $100 more during their stay than pre-Bonvoy guests. 

Slow Start for 2024 F1 Race

For all the complaints from Las Vegas locals, the inaugural F1 Las Vegas Grand Prix last year was a boon for MGM – particularly at its Big Three casinos.

But Hornbuckle said the excitement for second edition of the race isn’t quite up to speed yet.

“The real issue with Formula 1 is it's off to a soft start as compared to last year where we had a lot of advanced pre-bookings,” Hornbuckle said. You can see some of our ADRs are down … 50%, give or take.”

The Las Vegas Grand Prix will run on the night of Nov. 23 this year. Hornbuckle noted that the Las Vegas Raiders have a home game on Nov. 24, so while the Big Three may be full of F1 fans, the south end of the Strip – Mandalay Bay, Luxor and Excalibur will be where NFL fans gravitate. 

Room Upgrades or ‘Creative’ Hand-Me-Downs?

And while the fiscal focus may be on MGM’s luxury resorts, they haven’t forgotten their more bargain properties. 

Next up for upgrades are the hotel rooms at Excalibur. Hornbuckle says the company is “going to get creative,” and will replace the furniture with what’s currently being replaced at MGM Grand. 

This MO of salvaging furniture from a higher end property being remodeled has worked for MGM before. In 2021, rooms at Luxor got Bellagio leftovers . 

Apparently, one casino-resort’s trash can always be another Strip hotel’s treasure.