Genting Berhad plans to shift the points of emphasis at Resorts World Las Vegas to mass market players and convention business following tepid first-quarter results at the Strip venue.
The $4.3 billion venue, which turns two years old next month and is the newest Strip integrated resort, posted revenue in the first three months of 2023 of $218 million, down from $227 million in the prior quarter. Earnings before interest, taxes, depreciation and amortization rose to $50 million from $47 million.
In order to grow EBITDA from current ~US$50 million per quarter run-rate, management intends to focus on building mass market business (to build customer database) and convention business on weekdays,” said Nomura analysts Tushar Mohata and Alpa Aggarwal in a note to clients.
While the $50 million in EBITDA at Resorts World Las Vegas represented an increase from the prior quarter, it’s still below the pace set by comparable Strip venues. For example, Wynn Resorts (NASDAQ: WYNN) said first-quarter adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) at it Las Vegas properties hit all-time highs.
Signs of Improvement for Resorts
In its nearly two years of operation, Resorts World Las Vegas has dealt with management changes and the omicron variant of the coronavirus, among other headwinds.
Those factors have affected the venue’s ability to ramp up at the pace analysts and Genting expected, but data suggest things are trending in the right direction. For example, hotel occupancy in the first three months of this year averaged 89.8% at an average rate of $280 per night, up from 70.8% and $229 a year earlier.
Additionally, owing to Genting’s broad footprint in Asia-Pacific gaming markets, Resorts World Las Vegas is poised to benefit as more travelers from those countries return to Las Vegas en masse — something that hasn’t happened as of yet, as noted by Wynn, another Asia-focused operator, in its earnings report.
“As international travel continues to resume and with strong demand for domestic travel to Las Vegas, RWLV remains focused on growth opportunities, including ongoing efforts to build RWLV’s database for casino and resort marketing,” added the Nomura analysts.
Big Events Could Be Boon
The Genting integrated resort’s ability to capture a piece of Sin City’s rebounding meetings and convention business is essential over the near term because the late second and third quarters are traditionally slow times in terms of major events in Las Vegas.
Conversely, analysts view Resorts World as well-positioned to capitalize on upcoming marquee events, including the Las Vegas Grand Prix in November and the Super Bowl next February.
Over the near-term, business travelers could carry the day for Resorts World as Genting forecast the venue will have its highest percentage of convention room nights to date this year.
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