Casino operator MGM Resorts managed to post a larger than expected profit in Q2 despite ongoing carnage at its Macau property.
In the three months ending June 30, MGM’s overall revenue fell 4.8% to $2.27b, while operating income more than doubled to $769m. However, $406m of this was a one-off gain from the sale of the Crystals shopping mall at its 50% owned CityCenter property in Las Vegas.
MGM China reported revenue down 19% to $452m thanks to a 3% decline in mass market table games and a 33% decline at MGM Macau’s VIP tables. Adjusted earnings fell 10% to $119m and operating income fell $7m to $51m.
Things were slightly rosier at MGM’s wholly owned domestic properties, as revenue was basically flat at $1.7b but adjusted earnings rose 12% to $515m and operating income was up 16% to $390m.
MGM CEO Jim Murren celebrated his team for having achieved “our most profitable quarter in eight years at our domestic resorts.” Domestic resorts earnings margins were 30.4%, the highest since 2007.
Murren said the result was all the more impressive given that it was being compared with Q2 2015, which saw Vegas hotel rooms fully booked in May due to the excitement of the Mayweather-Pacquiao boxing match and the US debut of the Rock In Rio music festival.
Murren said that the good times had continued into the first half of Q3, including “the best July as a company we’ve ever had.” Murren said MGM was seeing “a resurgence in high-end gaming business to Las Vegas,’ particularly by customers from Mainland China and other Asian nations. July has also been strong in Macau, reflecting Murren’s view/hope that the market had “bottomed out” (again).
Vegas could enjoy a further boost this year due to concerns over the Zika virus spreading in Florida. Murren said execs at the JetBlue airline were seeing decreased travel to Florida and a corresponding uptick in trips to Vegas. Murren cautioned that MGM “certainly don’t want to benefit from that,” but, you know, he’ll take it.
Referencing last weekend’s $4.4b sale of Caesars Entertainment’s social gaming division, Murren talked up his company’s myVegas social casino product. Murren had previously described myVegas as “an extremely interesting customer acquisition tool” but now says the social casino is adding an annual $20m to MGM’s bottom line.
The $1.4b MGM National Harbor casino was supposed to open in Maryland this month but Murren said the property will now open this December. Murren confidently repeated his prediction that it would become “the most profitable commercial casino in the United States outside of Las Vegas.”