MGM 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

 

OVERALL

  • WORSE:  While overall EBITDA was in-line with reduced expectations, business trends have certainly worsened since the Q1 conference call.  Q3 RevPAR looks like it will go negative.  However, the precipitous drop in the stock price had already incorporated the softness.  Management's comments about the environment improving post quarter end was surprising.  We'll see how it plays out.

  

LAS VEGAS

 

CONVENTION MIX AND PACE

  • LITTLE WORSE:  There was a patch of softness from May-June that led to drop off in in the year for the year convention bookings.  MGM's convention mix for 2012 is trending at about the 14-15% mix level (2011 mix was 14.7%) which is below where they wanted to be.  2013/2014 bookings have not been impacted, however.
  • PREVIOUSLY:  "We expect convention mix to increase YoY during 2Q [at least +1%], and most notably our convention pace is up significantly in 2013 and 2014.  We expect convention mix to be flat to slightly up year-on-year this year."

2Q REVPAR GROWTH

  • SAME:  LV REVPAR rose 5% YoY. 
  • PREVIOUSLY:  “Based on our current booking trends, we expect a mid single digit RevPAR growth in the second quarter."

2012 REVPAR GROWTH OUTLOOK

  • WORSE:  3Q REVPAR will be down slightly with weakness in bookings in May/June.  It's too early to make a call on how 4Q will shake out 
  • PREVIOUSLY:  "We continue to believe that RevPAR growth for the year will be at least mid-single digit with potential upside coming from the in the year, for the year convention bookings and retail segment strength.  It's a combination of both, slightly more occupancy."

MGM GRAND REMODEL 

  • SAME: ~3,300 rooms have been completed to date, with the balance expected to be completed by September
  • PREVIOUSLY:  "Our MGM Grand room remodel program continues to progress nicely with roughly 2,300 rooms completed and that project is on budget and on time to be completed by September of this year."

ARIA  

  • BETTER:  Aria occupancy reached an all-time high of 92.7%; quarterly REVPAR also reached a record of $187.  Much of the hotel growth is occurring in the more profitable cash segment.  Convention business at Aria for 2013 remains robust.
  • PREVIOUSLY:  "Looking out for the next two quarters, room bookings [at Aria] are significantly outpacing last year. We expect occupancy in the second quarter to be the highest ever for ARIA driven by continued growth in convention business as our world-class convention space continues to gain traction in the marketplace. Convention business is also robust for 2013."

CITYCENTER MARGINS

  • SAME: CityCenter 2Q margins came in at 25.2%
  • PREVIOUSLY:  [CityCenter margin] "You can expect the margin to be about 25%."

 

MGM 2Q REPORT CARD - mgm 2


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