While the United States' economy is facing unprecedented inflation, rising gas prices, and a tightening labor market, the present economic difficulties are quite different from previous recessions. The economy has its flaws, but many individuals are doing well, and employment remains relatively plentiful.
Everyone is hanging over a gray cloud, where people aren't exactly sure what's next, but for a lot of Americans, times are actually pretty good. Many people who worked during the recession have increased their savings and are eager to have a great time.
Vici Properties (VICI) - Get VICI Properties Inc. Report, the largest land-owner on the Las Vegas Strip owns the property under many Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report and MGM Resorts International (MGM) - Get MGM Resorts International Report properties, and it has seen nothing but good news from its tenants on the Las Vegas Strip.
The real estate investment trust that makes about half of its income from its Las Vegas properties does not believe that Caesars and MGM's impressive performance is an anomaly.
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Is the Las Vegas Strip Recession Proof?
During a second-quarter earnings call, Vici CEO Ed Pitoniak shared his thoughts about the state of Las Vegas and the company's operations there.
"The gaming customer has proved to be more resilient through both garden-variety recessions and full-blown crises than just about any other discretionary consumer out there," he said.
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Vici does not need Caesars and MGM to prosper, it just needs them to be able to pay their rent. That does not appear to be a problem anytime soon, according to Pitoniak.
"Our operators are extremely adaptive and adaptable in dealing with changing circumstances, and both the gaming consumer and the gaming operator's resilience give Vici confidence that a potential recession will not harm our operators' credit quality."
Vici might be the finest investment in Las Vegas.
Caesars and MGM have both done exceptionally well in the post-covid restrictions world. Both businesses, and really most companies, remain vulnerable to economic conditions. If things go wrong, or people become more concerned about the economy, they may be less inclined to go to a Las Vegas restaurant or to go with Bobby Flay's. burger joint when it comes to eat.
According to Pitoniak, Vici has no concern about that.
"There have been many uncertainties about consumer spending forecasts, and I would simply repeat that our income does not fluctuate based on monthly or quarterly trends," he said.
But, while the CEO does not worry about his own company's revenue stream, he's also fairly certain that Caesars and MGM have little to fear as well.
"Now with that said, the Strip continues to generate incredible amounts of revenue. For example, gross gaming revenue in May was 41% above 2019 levels and Harry Reid International Airport just set a new all-time high for passenger traffic this past June," said the gaming industry.