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I guess Las Vegas casino executives will have to find a new metric to promote to investors. McCarran airport data just released suggest occupancy will suffer a major hit in October. The number of enplaned/deplaned passengers declined 12.8% which was only slightly better than September at -13.2%. September was the worst year over year decline since 9/11 impacted the last four months of 2001.

Operators have consistently used the tool of adjusting room rates to keep occupancy above 90% to leverage the big fixed asset called the casino. The inability to maintain occupancy even with double digit rate cuts is very disconcerting. Gaming revenues are likely to begin declining at a faster rate or the casinos will have to cut rates even more and endure significant margin erosion. Not pretty.

We’ve dusted off our model which has been very accurate in projecting gaming revenues from just the airport data. October 2008 gaming revenues could fall by 17% assuming a normalized slot and table game hold percentage. Last year in October, slot revenue was boosted by an abnormally high hold %. On the table side, October volume was unusually high given the visitation level. October 2008 faces this tough comparison which should amplify the 12.8% McCarran drop.

If occupancy levels track the airport data, this will be a very bad signal for the duration of this downturn. I suspect any sustained Las Vegas recovery is a long way off. This is not good for MGM.

October will not prove to be very kind to the operators based on the airport data