AIRPORT TRAFFIC DOWN BUT REVS MAY BE UP

McCarran Airport traffic declined 2.1% in Dec. However, an easy hold % and table drop comparison with last year coupled with recent strength in the high end from Asia may have resulted in Strip revenue growth.

McCarran Airport in Las Vegas released the number of enplaned/deplaned passengers at 3.1 million for the month of December, down 2.1% y-o-y.  On the surface, that would seem to be enough to push gaming revenue growth into negative territory following November’s surprise increase.  However, in December of 2008, table game hold percentage was only 10.1% versus a more normalized hold of 12%.  Moreover, baccarat drop, which can be extremely volatile month to month, was also abnormally low last year.

In addition to the easy comparisons in hold percentage and table drop there are two additional factors leading to a conclusion that Strip gaming revenue growth could be positive again in December.  As we’ve written about, there has been an acceleration in high end Asian play recently due the strong economic conditions, particularly in China.  Macau is experiencing the same trend.  Also, CityCenter opened in mid-December which probably spurred above normal high end visitation.  

Assuming normal hold percentage, we project Strip gaming revenues to once again climb 8% - November also posted +8% - over the same month last year.  Hold percentage is always the wild card, of course, and the assumption of normal hold is the largest y-o-y contributor to our positive revenue projection.  If we assume consistent low hold with last year, our model projects slightly negative Strip revenue growth.

Here our are projections:

AIRPORT TRAFFIC DOWN BUT REVS MAY BE UP - dec est strip revs

AIRPORT TRAFFIC DOWN BUT REVS MAY BE UP - mccarran dec chart