Vegas Casinos Bullish on Hotel Room Upgrades, Lukewarm on F1 Potential

_{Las Vegas casinos are investing in room renovations but remain cautious on 2024 F1 race revenue. (Image: Sipa US / Alamy)}

During third-quarter earnings calls, Las Vegas casino operators alerted stock analysts about the upcoming Las Vegas Grand Prix F1 race (LVGP). The casino corporations also divulged plans to upgrade hotel rooms throughout the Las Vegas Valley.

Earnings calls are not fun but we listen because they offer insights to operations today and tomorrow. When looking at Vegas casino corporation earnings calls, we can see how and where guests are spending their money.

Non-Gaming Revenue Rules Las Vegas Roost

Las Vegas is always changing and the casino operators mostly follow the money. The majority of revenue at casinos on the Vegas Strip has been non-gaming for more than two decades.

While not as extreme as the Vegas Strip, this trend is now the standard at all Nevada casinos. According to the Nevada Gaming Control Board annual Gaming Abstract report, only 36.6% of statewide casino revenue was from gaming. 

Only 26.6% of revenue at Vegas Strip casinos was from gaming. 

According to the report, Vegas Strip non-gaming revenue was split as such:

• Hotel rooms: 33%
• Food: 17.8%
• Beverage: 7.9%
• Other: 14.6%

The revenue splits are a little different elsewhere in Nevada but the trend is towards non-gaming. Las Vegas casino operators are following the money.

Casino Operators Investing in Hotel Room Upgrades

During the slew of casino corporation earnings calls over the past couple of weeks, many shared updates for next year that include hotel room renovations.

MGM Resorts revealed that the company is already upgrading 4,000 standard hotel rooms at MGM Grand. The company will also be renovating W Las Vegas as it transforms from the Delano brand. There’s no timeline on the property-wide changes.

Wynn has upgraded the hotel rooms and villas in its main tower over the past couple of years. Next year, the company will turn its attention to the Encore Tower. The company didn’t divulge a timeline during its recent earnings call but it will renovate all 2,000+ hotel rooms next year.

Station Casinos has new casinos in the works but it’s focusing on upgrading its current casinos before building one from scratch. Next year, the company will renovate the hotel rooms at Green Valley Ranch from June to November.

This year, Boyd Gaming completed room renovations at Main Street Station and Gold Coast. During its third-quarter earnings call, the company announced it will be renovating the hotel rooms at the Orleans next year.

Caesars didn’t reveal plans to update hotel rooms next year but the company touted high room rates and occupancy last quarter. Looking forward to the fourth quarter, the company expects to see a revenue boost from new Versaille Tower rooms in Paris.

Besides Wynn, each of the casino corporations has numerous casino hotels in Las Vegas. Don’t be surprised if there are more renovations announced when the company reports full-year earnings for 2024 next year.

Casinos Lukewarm on Revenue from F1 Las Vegas Grand Prix

LVGP was expected to be a high-roller boon for Vegas Strip casino corporations last year. The results were mixed and the tone heading into the 2024 F1 race is similar to how the companies fared last year. Each corporation has adjusted expectations and is looking for more of the same.

Wynn was downright giddy when reporting fourth-quarter earnings. Thanks to the holidays, F1 race, and surrounding events, the average daily room rate (ADR) was $641, a 28% increase from the fourth quarter the previous year. 

The company is expecting more of the same as it has a similarly busy LVGP calendar this month.

While MGM Resorts “Big 3” of Aria, Bellagio, and Cosmopolitan generated solid revenue, its other properties appeared to have been hurt by higher prices. The company wisely planned to reduce prices at its South Vegas Strip casinos until the NFL announced that there would be a Raiders game at Allegiant Stadium on the day after the LVGP.

Room prices at Mandalay Bay and Luxor are the typical higher rates for Raiders games. The outlook for this year is about the same as last year and could change based on a few high rollers having a losing weekend.

Caesars has similar expectations as MGM heading into the race. The company expects the race to generate similar revenue for the company as last year plus or minus a few bucks.

The impact of LVGP on Boyd Gaming and Station Casinos was minimal and neither company had much to say about expectations for the race this year.