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Las Vegas operators have tried to focus investor attention on occupancy levels as an indication of still strong demand. Of course, room rates (and margins) are being cut to maintain that demand. But at least the sustained occupancy should sustain gaming revenues, right? Wrong. Strip gaming revenues fell 15%. I had predicted a 12% drop in my 8/24 post “LAS VEGAS: OMINOUS JULY AIRPORT DATA”. Casinos did play unlucky in Baccarat and some other table games but even after normalizing the hold percentage for this July, Strip gaming revenues still fell 9-10%.

Anecdotally, we are not hearing about any positive inflection points yet in August and September. If anything, room rates are falling at a faster rate, indicative of lower demand, not sustained demand. Margins won’t look pretty. I’m still struggling to reconcile the data and short booking windows with MGM’s prediction of a Q4 turn. I’m certainly not seeing it.

Trends are worsening