Caesars Entertainment (CZR) - Get Caesars Entertainment Inc Reportand MGM Resorts International (MGM) - Get MGM Resorts International Reporthave taken a more-is-better approach to the Las Vegas Strip. Both companies have a wide spectrum of properties that cater to different tastes.
MGM, for example, has Excalibur and Luxor to reach lower-end customers, while MGM Grand, Mandalay Bay, Bellagio, and Cosmopolitan are among the other areas. It also has New York, a Middle tier, although it does not break resorts into tiers, but it''s fair to say it offers hotel rooms at its casinos at a variety of different rates.
The Palace of Caesars, which includes the even-more-exclusive Nobu as a hotel-within-a-hotel concept, has adopted a similar approach. In the center, it offers Harrah''s, the Linq, Paris, Cromwell, and Planet Hollywood.
These aren''t all casinos owned by MGM and Caesars, but both companies want to provide a wide spectrum of customers.
Get Wynn Resorts, Limited Report, the owner of its self-titled casino hotel and the adjacent Encore Resort Casino, has instead chosen to focus more on higher-end clients.
The company, however, stated during its first quarter earnings call that it''s continuing to invest in its Las Vegas properties.
Wynn Invested Through the Pandemic
Craig Billings, Wynn Resorts'' chief executive, talked about how his company has improved as Las Vegas has slowly recovered from the epidemic.
"Encouragingly, March strength has continued until Q2, and our forward bookings have shown no signs of a drop with our booking speed at pre-covid levels on substantially higher [average daily rates]," he said.
"Now, everybody on the call knows that Las Vegas as a market has experienced a rapid rise in recent years. We certainly have been a beneficiary of that. But we''re also benefiting from our own efforts from the past several years."
Billings said that the company has recovered from the epidemic, not just because the market has improved, but because Wynn has been steadily investing.
"We invested in our customers and our services during difficult times," he said. Delilah completed a refresh of the lounges adjacent to the Lake of Dreams. We opened Casa Playa and renovated the Wynn Tower rooms.
That''s an engagement the CEO hopes to make.
"We look at every inch of this market-leading property and ask ourselves, ''how can we make it better?'' I''m grateful for your dedication to our craft, which makes me so proud, and we hope you have long-term results."
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As marketing costs increase, demand drops, causing a wider Q1 loss.
The property in Las Vegas will have plenty to come.
"We paid $96 million in the quarter, which primarily in Las Vegas, for the room remodel and the theater renovation," said the CEO. Julie Cameron-Doe
"We''ve got about $50 million to $60 million left on the room remodel, which will be completed in June." "We''ve got around $55 million to $65 million to go on the theater renovation, which should begin in the fall.
"We''re examining roughly the $75 million to $85 million per year in Vegas in terms of maintenance.
Controlling Costs, Luxury Experience
Cameron-Doe spoke briefly about how the company has managed its expenses while explaining how it has improved. She spoke briefly about how the company''s Las Vegas business has improved.
"Overall, our hotel occupancy increased by 77 percent in the quarter, with 62 percent occupancy in January, increasing to 91 percent in March."
"Importantly, we''ve maintained our gratitude for our luxury company and continue to compete on quality of product and service experience."
Cameron-Doe clarified that Wynn had an eye on the bottom line, but also wanted to ensure that any costs reduction were avoided for guests.
"The Vegas team has done a fantastic job of controlling expenses without negatively impacting the guest experience, delivering an adjusted property Ebitda margin of 36.1% in the quarter," she said.
Because of decreased head count and large-based cost efficiency in areas that do not impact the guest experience, operating expenses excluding gaming tax per day "was $3 million in Q1 2022, approximately $160,000 per day below Q1 2019 levels.
"We remain committed to maintaining a cost structure that matches our margins appropriately and our high standard of service."
Despite the epidemic, Wynn, which sells itself as a high-end property, has been able to keep its prices at (or above) historic levels.
"With respect to ''19, we continue to rise significantly in terms of volumes." And as far as volumes, we''re right on pace with ''19 volumes," said Wynn Las Vegas President Brian Gullbrants.
Wynn has offered a roughly $400-per-night daily rate for its hotel rooms.