MGM 4Q 2013 REPORT CARD

In an effort to evaluate performance, we compare how the quarter measured up to previous management commentary and guidance

 

 

OVERALL:  

  • BETTER - MGM China was a bit better than projected and much better than expected when the quarter began.  Las Vegas performed in-line.  Q1 commentary was, as expected, positive with RevPAR guidance at +10%.  We did sense some uncertainty with regards to trends for the remaining 3 quarters of the year and limited visibility.

 

 

MGM 4Q 2013 REPORT CARD - mgm

 

MGM COTAI

  • WORSE:  Project cost increased to $2.9 billion due to redesign of entertainment options.  Remains on track for early 2016 opening.
  • PREVIOUSLY:  Remain on track for an early 2016 opening...budget is still standing at $2.6 billion.

LV STRIP REVPAR/CONVENTION TRENDS

  • BETTER:  4Q Strip REVPAR was 1% - slightly higher than projected.  1Q REVPAR growth expected at 10%.  1Q convention mix: 22% (near peak levels).  For FY 2014, 15.5%-16% mix (near peak levels).
  • PREVIOUSLY:  4Q room revenue to be up slightly year-over-year on relatively flat RevPAR with accelerating trends in the first quarter. In fact, looking into next year, 1Q convention trends are looking exceptionally strong. Are approaching peak convention mix in 1Q with an expected 21% convention room mix and beyond 1Q, expect an increase in convention room mix for all quarters throughout the year.

MGM CHINA VIP

  • BETTER:  VIP RC increased 32% YoY.  MGM continues to maximize table productivity.
  • PREVIOUSLY:  
    • Still see opportunities for continued improvement in yield on the VIP tables to maximize profitability from this segment
    • In the process of upgrading main floor and enhancing our product offerings to drive future growth. Remodeling includes renovation and expansion of the Supreme Lounge which has been very successful...expect this to be completed in 2014. The Supreme Lounge is an exclusive area dedicated to high-margin premium mass market customers. 

MGM CHINA SLOTS

  • BETTER:  Slot volumes grew 16% in 4Q 2013, compared with 10% growth in 3Q.
  • PREVIOUSLY:  Slot business, overall, has seen some flattening in the market. Even though there's good growth across the market, the growth rates have slowed a little bit.

LV FLOWTHROUGH

  • SAME:  Strip flow-through hit 70% in 4Q.  But if you adjust out certain one-time items (e.g. vacation accrual policy), it is within that 50%-60% range.
  • PREVIOUSLY:  
    • Goal has been in the 60% range on a long-term basis. And that's extremely achievable.
    • Any ADR increase obviously will always go to the bottom line. And then in general, as the convention mix improves and the catering improves, that's a higher-margin business than normal food and beverage business. Hopefully, with the increased visitation, it will increase the occupancy in the shows, which also goes all to bottom line because those are just empty seats if they're not being filled right now. So the flow-through next year should be as strong if not stronger than what we've seen this year.

 

BORGATA RELICENSE

  • SAME:  Dialogue continuing.  In 1H 2014, MGM will be back in front of NJ DGE commission. 
  • PREVIOUSLY:  First goal is to be relicensed in the state. No reason to expect MGM won't be relicensed there.

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