• It's Coming...

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

THE BAD BET OF GOING ALL IN ON JUNE GAMING REVENUES

Visitor statistics released by the state of Nevada confirm my analysis yesterday that June was not a good month on the Strip. Gaming stocks ripped yesterday due in part to “only” a 3% drop in June gaming revenues. I argued that the “real” figure was more like down 9%, definitely not good, but nobody cared. After analyzing June visitation statistics I would go even further and say that June was actually worse than May.



  • Yesterday I showed that June’s YoY decline in slot volume of 6.1% actually fell sequentially from May’s 5.8%. The deteriorating fundamentals can also be seen in both the key visitation and hotel stats shown in the following charts. Strip RevPAR declined 18% in June, down from an 8% decrease in May, driven by both rate and, surprisingly, occupancy. Turning to visitation, both air and drive-in traffic declined at an accelerating rate. People are flying less, people are driving less. I don’t know how anyone can look at these stats and argue that business levels improved sequentially during the quarter.

  • We won’t see July’s numbers for another month but my intelligence says there won’t be improvement. From here on out, we’re relying on the flop to determine Vegas’s hand. MGM management predicted a fundamental acceleration in Q4 and called Q2 the trough. However, in this business with short booking windows, not even the dealers know until the cards are turned over.

Hotel metrics are deteriorating. June RevPAR down 18%
Air traffic, drive-in traffic: it's all bad