Third quarter earnings reports are starting to pour in and, for the first time in awhile, they should say something more than more of the same.
All eyes will be on Macau for Las Vegas Sands and Wynn Resorts and investors will be listening closely to how their new properties are performing.
The questions will be whether Parisian and Wynn Palace are performing well enough to boost the outlooks for both companies, and whether they are growing the market or mostly cannibalizing competitors, and their own properties.
So far one Macau operator has reported—Galaxy—and its numbers were encouraging. Galaxy outperformed expectations on a combination of strong mass-market play, and non-gaming spending that rose to a record HK$870 million thanks to both improved retail sale and 98 percent hotel capacity.
Those numbers are especially encouraging for Las Vegas Sands and its mostly owned subsidiary Sands China, as LVS has the same components working for it – appeal to the mass-market, and the city’s leading retail and hotel capacity.
Further, Parisian is aimed straight at the middle of the mass market.
We’ll know soon enough as LVS reports third quarter earnings on November 3.
Wynn will keep everyone in greater suspense. Wynn Palace reportedly has gotten off to a slower start than hoped, and the smaller company with a narrower business model has a lot riding on the success of the $4 billion property.
However, Wynn also has a record of new properties ramping up, so the first few weeks of the Palace won’t tell the story. But there is no getting around the fact that Wynn Palace is a big bet for the company.
In the U.S., the questions will be the Las Vegas Strip, Las Vegas locals and regional markets.
At present, Las Vegas appears strong. The Strip is especially important for MGM Resorts and a lot of equity analysts have put considerable credibility on the line buying into the company’s bullish pronouncements.
As we’ve mentioned before, a senior management that once invested billions of dollars in the name of architecture and creating urban environments on the Strip seems to have gotten religion and now talks about the reason they are there – building value for shareholders.
Each quarter now becomes a test on whether MGM can execute.
Perhaps the most interesting reports will be those coming from Red Rock Resorts and Boyd Gaming about the Las Vegas locals market. No doubt, the RRR and BYD have shown their belief in the market with their recent purchases of the Palms casino by RRR and Aliante and the Cannery casinos by BYD.
Another way to judge the Las Vegas locals market is Golden Entertainment. As the owner of 50 taverns and as a major slot route operator, GDEN is almost a pure play on the health of the southern Nevada economy. How it performs might tell us something about its bigger brethren, as well.
Similarly, Monarch and Eldorado will tell us a lot about the Reno resurgence. MCRI already has reported its third quarter numbers, and they beat expectations.
MCRI doesn’t conduct investor conference calls, but ERI does, and what CEO Gary Carano and CFO Tom Reeg say about Reno will be important.
Finally, there are the nation’s regional markets. Gaming revenues reported in September recovered after what might have been just an August hiccup.
Now, it will be worthwhile to hear what managements have to say about October so far, and trends heading into November. If business is running strong, It might just say that regional gaming is back.
And if we get good reports out of Las Vegas, LV locals and regional markets, we might be in the pinch-me phase of the industry’s recovery.
