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Yes, the numbers were in-line with our projections but the underlying metrics were not encouraging. Same store volumes were awful as CityCenter actually took a big bite thanks to Baccarat and luck.

We were surprised by the positive reaction the Street had to the positive growth in the December Las Vegas Strip revenues yesterday.  A deeper analysis indicates that they underlying metrics were not good with the possible exception of MGM’s CityCenter. 

In the Nevada Gaming Revenue Report released yesterday, CityCenter numbers actually fell in a different category than those of the rest of the mega properties since it was open for about half of the month.  Nevada groups casinos into revenue categories of $36-72 million and greater than $72 million.  CityCenter would normally be grouped in the latter but for this month only, it fell into the former category.  This allows us to approximate CityCenter’s revenues since there was no other major supply in the $36-72 million category.  Here is what we found.

CityCenter generated about $57 million in gaming revenues for the 15 days it was open in December.  Before people get too excited about the annualized $1.3bn in gaming revenues this number implies, we have a couple of comments.  First, over 80% of that revenue came from Baccarat which always spikes during the Christmas to New Year’s season.  Second, with MGM’s database of high end Baccarat players, it is very easy to concentrate players at one property while cannibalizing its other high end properties such as MGM Grand and Bellagio.  Finally, CityCenter played very lucky which contributed around $15 million in additional revenue – over 25% of the total.  Until we see how MGM’s other properties performed it is impossible to draw any lasting conclusions from the initial CiityCenter results.

Unfortunately for MGM, the same store metrics suggest that December was not a good month for the existing properties.  Our discussion here will be concentrated on volumes (slot handle and table drop) because revenue can be swayed significantly by luck.  We focus on volumes in the greater than $72 million category because that is where most of the major properties fit and CityCenter, at least for December – is not included there.  The major properties of WYNN, LVS, and MGM all fall into this category.  The following chart details the important same store metrics (>$72m) versus the Strip total.

DECEIVING DECEMBER ON THE STRIP - dec strip ss metrics

The clear takeaway is that same store volumes were not good.  Probably the purest, highest margin, and most stable indicator of Strip health, same store slot volume, fell 15%.  Despite the boost from China Baccarat players, same store table drop declined 12%.  Adjusting for the much higher slot hold percentage, total same store revenue in the category would’ve fallen almost 14%.

Yesterday, MGM, LVS, and WYNN, climbed 9%, 7%, and 6%, respectively.  Some of it was beta to a strong market but these stocks really took off when the Nevada numbers hit the tape.  Expectations for Macau are already high – justifiably so – and now it looks like they are for Las Vegas too.  We’d fade that optimism.