Spurred by F1, Super Bowl, analyst expects strong half year for Vegas

A Las Vegas-based gaming industry analyst is projecting record or near-record visitation volume through March and profitable times for casino companies.

John DeCree, an equity analyst with CBRE Equity Research, told investors in a Tuesday report about his takeaways from a series of meetings he had with gaming executives during last week’s Global Gaming Expo, where he met with more than 20 companies.

“Broadly speaking, the message we heard throughout G2E was more of the same,” DeCree wrote. “Fundamentals across all segments and verticals remain sound in spite of ongoing macroeconomic concerns and a significant pullback in the shares of most casino and gaming companies since (second-quarter) earnings.”

DeCree added that one of the biggest questions and themes throughout G2E was is Las Vegas over earning?

“Consensus seems to think so, but few people, if any, can articulate by how much,” he said. “The demand in Vegas is abundantly clear, with sold-out flights, rooms, dinner reservations and concert tickets. Pricing on all items continues to rise, and the question remains: At what point does the consumer balk? From now until at least March, the group, convention, and entertainment schedule is bursting at the seams, so visibility for continued strength remains clear. This year is shaping up to be a banner convention year, and 2024 is positioned to be even better.”

Unprecedented potential

Earlier this month, Las Vegas Convention and Visitors Authority President and CEO Steve Hill said Las Vegas has unprecedented growth potential through mid-February with 17 special events, conventions or resort openings that are bound to produce between $10 billion and $15 billion for the local economy. Among the major events on the horizon are the Nov. 18 Formula One Las Vegas Grand Prix and the 2024 Super Bowl Feb. 11 at Allegiant Stadium.

“The entertainment schedule gets less attention than the convention calendar but has been the primary driver of unprecedented weekend demand,” DeCree wrote. “With major venues like Allegiant Stadium exceeding initial expectations for visitation and new venues like the MSG Sphere driving incremental demand, weekend occupancy is as full as it gets. There is a clear demand-supply imbalance that should persist for the foreseeable future even with Fontainebleau scheduled to open by year end. Maybe Vegas is over earning, but it is unlikely to revert to anything like 2019 anytime soon.”

DeCree said he met with Hill, Bally’s Corp. Chairman Soo Kim and the management teams of Caesars Entertainment Inc., Penn Entertainment Inc., Golden Entertainment Inc., Full House Resorts and Genting Berhad, parent company of Resorts World Las Vegas.

Report details

Other details from his report:

— He expects contract disputes between Culinary Local 226 and local resorts to be resolved by the start of the grand prix.

“Even though the Culinary Workers Union has authorized a strike and started picketing last week, our meetings with multiple operators gave us comfort that a fair deal should be reached in the coming weeks without the need of a strike,” he wrote. “While there is no definitive timetable, we look to F1 in November as an outside date for getting a deal done. We believe all parties in Las Vegas are focused on maximizing the F1 opportunity, and having a new contract in front of that event should benefit everyone.”

— Chamonix, Full House Resort’s new resort in Cripple Creek, Colorado, is expected to open Dec. 26. The small Las Vegas-based company also has a temporary casino open in Waukegan, Illinois, and expects the permanent facility to open in about a year.

— Golden Entertainment’s Strat property is riding the wave of convention success even without a convention center. “The Strat should also benefit from the opening of Atomic Golf and additional room renovations, helping to drive both foot traffic, higher average daily room rates and higher on-property spend.”

— Most of Bally’s Corp.’s attention is focused on its temporary property in Chicago, the new casino it is building there and its bid for licensing in New York. DeCree believes it’s possible that Bally’s would seek a partner for its Las Vegas Tropicana property.

“The biggest takeaway from the Tropicana discussion seems to be the company’s optionality at the site. The (Oakland) A’s deal is still in the works, but assuming it gets done, Bally’s has an attractive option at the Tropicana site. The potential investment would be significant, but we expect the company would likely find a partner for this one.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.