FlyerTalker7654

With recent reports in the media showing that various hotels such as Cosmo, Hard Rock are all taking massive losses, I was just wondering if any hotels are making any money? Other reports show that the number of people going to Vegas is on the up, so whats the deal? Anyone making any money these days?

Loren Pechtel

The basic problem is the debt service. The hotels take in plenty to meet their operating expenses, they don't take in enough to pay the debt on building them in the first place.

ibdsux

I suspect the problem is not the number of visitors, but what visitors are doing while they are there. My unscientific take is that while occupancy is high, people are not gambling like they used to. The last time I was there, it seemed to me the non-gaming areas of the hotels (restaurants, shows, etc) were doing well but there were row upon row of empty slots while dealers fidgeted at empty tables. The emergence of Macau has no doubt done some damage to the bottom line, as many Asian whales are no longer making the trip.

Jimgotkp

Most of the Strip properties that aren't CET-affiliated are doing pretty well, specifically the MGM properties, Wynn/Encore, and Venetian/Palazzo. Most of the revenue is coming from dining/entertainment nowadays, which is why a lot of new restaurant and clubs are appearing. The convention business is also good for those with large conference centers (ex. Mandalay Bay, MGM Grand, Venetian/Palazzo, etc.). The hotel departments at most of the Strip properties are doing well because of the resort fees. Imagine how much money they're making per day if most of their rooms are occupied and most of them are charged a $25 resort fee..

CMK10

Probably doesn't help how many more US cities have casinos now. Pittsburgh has a really nice one, Detroit has at least two, there are half a dozen in the Phoenix area etc.

gengar

Most properties are profitable for now; you just happened to see news about two that have specific problems. It's particularly interesting that you mention Hard Rock and Cosmo, because Hard Rock lost a lot of its target demo to Cosmo when it opened - both catered (or at least marketed) towards a young, hip crowd (or at least, a wannabe young and hip crowd - as I've said before, I've never seen so many 40-year-olds wearing sunglasses indoors as when I walk through Cosmo). It's hard to sell an older, off-Strip property like Hard Rock when Cosmo exists, especially when features like Rehab have been imitated by a plethora of Dayclubs on the Strip.

Cosmo's problems are mostly due to layout issues; in this case, they didn't have a choice due to the small footprint (unlike Aria and Planet Hollywood/Aladdin before it, which didn't have that constraint). Vertically-oriented properties (or in Aladdin's case, one that had an entrance above the Strip) just don't work in Vegas. There's a reason why Aria's restaurants on the second floor have always performed below MGM expectations - when there's no pedestrian traffic, all you can be is a destination restaurant.

In Cosmo's case, it'll be really interesting to see what Blackstone does now - whether they'll try to improve Cosmo's always-weak gambling revenues or double down on their profitable entertainment and restaurant venues. Either way, we know there will be big changes.


It's not even gambling, it's just that people are not spending nearly as much money as they used to. We are seeing very high occupancy numbers currently, with many properties matching the boom days in the mid-to-late 2000s - but not only is the room revpar dismal in comparison, people aren't spending money on anything else either.

Vegas over the last couple years teaches that it's easy to cut prices to fill rooms. It's another thing entirely if those people will spend the same money that people were when they were filling expensive rooms, and the answer is clearly no.

kettle1

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Go to the Hard Rock many days and you see a bunch of 50-60 year old's thinking this place is "hip" and they are still "hip". It sure was 15-20 years ago.

I was there last week on a full comp (thanks to a new promotion with Golden Gaming) and saw a 60 year old, with a pony tail trying to hook up with a 25 year old saying how he loved her "big breasts", etc. (She was not a hooker). This "fine grandpa" was rocking out to the Moody Blues playing over the sound system, drunk.

Her boyfriend (30 years old) came by and almost took the old dude out.

As far as casinos making money, look at

https://finance.yahoo.com/q/co?s=BYD

gengar

There's a big difference between gaming companies and Las Vegas properties. When discussing property profitability (as in my post and the OP), what we're talking about is operational profitability. The reason MGM and Boyd reported losses is for non-operational reasons. We're also talking about Vegas properties specifically - no doubt Caesar's is a big loser in Vegas, but nevertheless the vast majority of their losses in 2013 came from writing down AC assets. (It works the other way too, of course - Venetian's high profits are largely from Macau, not Vegas, and that's been true for years.)

Given how almost all properties were not even operationally profitable after the last recession, I think most gaming companies will happily take what's going on in Vegas now.

kettle1

I agree with you on this.

I was looking at the stock side. Vegas is picking up.

I sure miss the $1.99 midnight buffet at the Golden Nugget (about 15 years ago). Vegas, has changed, for the worst - unless you are into nightclubs ($$$) and pools ($$$). Bottle service, what?

I think Caesars, Int. (Harrah's) is in trouble. Wynn and Sands Corp. are looking very well, thanks to Asian profits.

lhgreengrd1

There are at least a half dozen nice Indian Casinos in the San Diego area, and another 4 or more in Palm Springs vicinity. These places have scaled up to the point that they are now comparable to the bigger, better casinos in Vegas. I'm sure that San Diego is considered a major market for folks to come to Vegas, but the truth is that nowadays, for gambling, one need not make the trip. Barona, Pechanga, Sycuan, Viejas, Pala, Valley View, Morongo, Spa, and Harrahs are all comparable to above average Vegas casinos now, in terms of both gaming and dining options and many of these are attached to luxury hotels as well.

kettle1

Indian Casinos do not have the same rules as LAS. Casinos overall in LAS are making money, but some have huge debt (Caesars and MGM are the worst). Sands (Venetian/Palazzo) and Wynn are making a killing in Macau, and much less in LAS. They are not losing money.

http://www.bottomlinepublications.co...you-can-bet-on

Betting at Indian casinos you have no idea the odds on slots and video poker. It is not regulated like NV and NJ. (except in CT). I agree many are very nice.

LAS makes more money on dining, shows, shopping, conventions, clubs than gaming today. Times change.

lhgreengrd1

Slots and video poker are sucker plays anyways. Blackjack and Craps and Poker with actual cards are much more predictable with respect to the odds of any specific plays.

kettle1

Agree. Also look at the payouts on Blackjack (they are different at different casinos).

lhgreengrd1

Right, but the Blackjack odds only vary as the rules do, such as whether or not Blackjack pays 3-2, when the dealer has to take a card, whether and when surrenders are allowed, side plays allowed on the cards, etc. One of the most common ways to sour the odds for the small-time players vs. the house is to only pay 1:1 on Blackjacks at the low minimum play tables.

FlyerTalker7654

Some really interesting points here. Although we have been talking about the bigger hotels, what about the lesser big names. As an example Riviera: rates in Sept $27 a night!!!!!! Granted you have the resort fee on top but honestly, how on earth can they sustain that sort of a price night after night? I believe they also in trouble?

gengar mentioned Caesars - what is interesting here is that Planet Hollywood and Paris appear to also have low rates in November compared to other properties.

At the end of the day this is great for the consumer because they have a choice and competition forces the hotels to offer more for less.