In a conference call regarding second quarter revenue, MGM Resorts International Chief Executive Officer Jim Murren stated the Zika virus in South Florida may inadvertently benefit Las Vegas, which is experiencing a surge in visitors, especially from Asia, business travelers and tourists from the Southwest. “As sad as that situation is in Florida, I certainly don’t want to benefit from that. I can say we’re seeing a pickup in air traffic and driving traffic even in the last couple of months,” Murren said.
He said JetBlue, which has a 3 percent passenger share to Las Vegas, commented “they’re seeing a pickup in passenger activity to Las Vegas and maybe a slowdown to Florida.” Federal health officials recently issued a travel warning to pregnant women to avoid a certain Miami neighborhood where the Zika virus has been detected—the first time federal officials ever warned travelers against visiting an area of the continental U.S. because of an infectious disease outbreak.
Murren added pent-up demand and other factors are causing Las Vegas to experience a “strong air activity and strong drive activity” from the Southwest U.S. and Asia. The summer surge, prior to the Zika outbreak in Florida, “is helping everybody in town, and not just the MGM portfolio,” Murren said. “It has been a remarkable summer out there. We have not seen this level of activity in terms of people in the resorts up and down the Strip ever. Layered on top of that we’re seeing a resurgence in high-end gaming business to Las Vegas during a time when it’s a non-traditional time to see these customers. We saw a lot of customers coming from Asia and both Mainland China and a variety of other markets in the Far East coming to Las Vegas.”
Murren said second quarter revenue dropped from $2.39 billion in 2015 to $2.27 billion this year. Casino revenue for the quarter increased less than 1 percent compared the same quarter last year. Room revenue for the quarter at MGM Resorts Internationals’ U.S. resorts increased 2 percent. “We had an extraordinary May last year with the Floyd Mayweather-Manny Pacquiao fight and a couple of major music festivals. It made for a really tough second quarter comparison and despite that our Strip revenue per room available grew 3.1 percent, which I know is below what we guided,” Murren stated.
The company also reported net income of $474.4 million, or 83 cents per share, compared with $42.9 million, or 17 cents per share, in second quarter 2015. Most of the profit increase came from selling its stake in the Shops at Crystals for $406 million.
Murren said an unusual number of Asian customers have visited MGM Resorts recently. But he noted, group business will remain strong into fourth quarter, resulting in a record year for group business in 2017. “Our leisure and convention business continues to be strong. That’s the bulk of where this city’s hotel business lies,” Murren said.
In a joint venture Anschutz Entertainment Group, MGM Resorts opened the 20,000-seat T Mobile Arena at the south end of the Strip in April. The $100 million, 5,000-seat Theater at the Monte Carlo will open in December. Murren said MGM Resorts will have 138 events this year compared to 74 in 2015. “If we have learned anything about Las Vegas and how different it is from the rest of the United States, special events and entertainment activity drive room revenue growth,” Murren said. Concerts for the remainder of the year will feature Garth Brooks, Coldplay, Drake, Kanye West, Carrie Underwood, Barbra Streisand and the Rolling Stones, as well as preseason NHL and NBA games.
