MGM Resorts International saw record performance across its global hotel portfolio during the second quarter, and it made progress on turning around the value narrative at its Las Vegas properties.
During the company’s earnings call, MGM Resorts President and CEO Bill Hornbuckle addressed the question on everyone’s mind: What’s the latest about the purchase offer from Barry Diller and his company, People Inc.?
MGM Resorts’ board of directors has formed a special committee comprising independent directors who have no affiliation with Barry Diller, People Inc. or the proposed transaction, Hornbuckle said.
“This committee continues to evaluate the proposed transaction in consultation with independent outside advisers,” he said. “I'm confident our board will pursue the course of action that's in the best interest of the company and our shareholders. I don't have anything more to share at this time.”
Las Vegas strength
MGM Resorts achieved record second-quarter consolidated net revenue, driven by a second consecutive quarter of year-over-year revenue growth from its Las Vegas Strip resorts, Hornbuckle said. The company’s regional properties also had their all-time best same-store quarterly revenue.
“Revenue for Las Vegas was bolstered by a solid underlying base of group and convention business at MGM Resorts and aided by strong attendance at events around town, ranging from BTS to UFC to a deep playoff running in the Stanley Cup by our very own Vegas Golden Knights,” he said.
Group and convention business carried on the momentum from the first quarter for MGM Resorts, delivering a 20% room mix in the second quarter and keeping on pace for the market segment to represent 20% of the room mix for the full year.
April and May were strong — May exceptionally so — due to events and other activities, Hornbuckle said. June was more challenged, likely due to the summer heat, but July demand picked back up.
Demand came from a diverse customer mix that included technology and hospitality corporate groups as well as top business-to-business trade shows and professional association meetings, he said. It was the highest second-quarter convention average daily rate and catering and banquet revenue in the company’s history.
MGM Resorts’ all-inclusive experience package has sustained solid momentum since its launch four months ago, Hornbuckle said. The offer generated more than 30,000 room nights, and it helped stabilize occupancy at the Luxor and Excalibur properties. By the end of the second quarter, nearly half of the guests who booked the offer were first-time visitors to MGM Resorts’ properties.
“The initiative has supported occupancies and forward bookings at Luxor and Excalibur and importantly turned the value narrative into a positive story,” he said.
The Las Vegas market continues to bring new experiences to guests, Hornbuckle said. In November, the city will host the Players Era tournament over two weeks at the Michelob Ultra Arena at Mandalay Bay and the T-Mobile Arena. It brings 24 top collegiate men's basketball programs from multiple conferences together, including four of the last five national championship-winning teams, for a bracket-style tournament to be televised on ESPN’s networks.
“From the all-inclusive experiences to the Players Era tournament, the spectrum of experiences we have created aligns with prevailing consumer trends, bridging the more deliberate spending patterns of value-conscious guests with a broadening demand for our premium live experiences,” he said.
Regional update
MGM Resorts’ regional operations saw solid performance through the second quarter, resulting in an all-time best revenue quarter on a same-store basis, Hornbuckle said.
The company will continue to make targeted capital investments through the portfolio, which includes enhancing its premium lounge offerings at both the Beau Rivage and Borgata properties and a room remodel at the Borgata.
The company’s properties through MGM China are still outperforming the market, Hornbuckle said. They’ve maintained market share of 16.4%, a sequential full-percentage-point increase. The World Cup temporarily affected June volumes in Macau, however.
“Our confidence is reinforced by the immediate and encouraging rebound in volumes observed post tournament throughout the month of July,” he said.
The construction of MGM Resorts’ integrated resort in Osaka, Japan, is meeting milestones on a timely basis as it moves closer to its scheduled 2030 opening, Hornbuckle said. More than 60% of the foundation piles are completed, and above ground, the main structure is taking shape with ongoing concrete placement and structural steel fabrication.
As of press time, MGM Resorts' stock was trading at $45.44 per share, up 24.5% year to date. The NYSE Composite Index was up 7.9% for the same period.