AIRPORT DATA BETTER BUT REVS MAY NOT BE

Sequentially, McCarran YoY traffic improved to -9.3%. However, high slot hold and strong table volume last year in July could cause July gaming revenues to fall 14% per our model.

McCarran Airport experienced a 9.3% year-over-year drop in passenger traffic in July.  The decline was better than June’s 11.4%.  On a revenue basis, we expect the decline to be worse than the airport traffic would indicate due to high slot hold and abnormally high table drop in July, 2008.  We project a 14% decline in gaming revenues.  Nevada will release those numbers in a couple of weeks.

AIRPORT DATA BETTER BUT REVS MAY NOT BE - july strip estimates

Gaming revenues appear to be stabilizing, albeit at a pretty low level.  Nonetheless, one would expect the increase in automobile traffic from California (due to low gas prices) to have a greater offsetting impact.  Automobile traffic has increased three straight months and likely did so again in July.  However, as we’ve been writing about, the favorable gas price comparison will reverse in November culminating in a 50% YoY increase in late December.  This is certainly a bigger issue for the regional gaming companies but will also negatively affect visitation to the Strip later this year.

Looking ahead, August and September look to be difficult comparisons.  Gaming revenues declined only 7.2% and 4.8%, respectively, in those two months. 

AIRPORT DATA BETTER BUT REVS MAY NOT BE - july mccarran chart