Two major Las Vegas Strip casino operators weigh in on Mirage, Trop closures
The two largest casino-hotel operators on the Las Vegas Strip are taking the good with the bad when it comes to the closing of two nearby resorts earlier this year.
Executives with Caesars Entertainment and MGM Resorts International said the April 2 closing of the Tropicana casino hotel and the July 17 shutdown of the Mirage casino hotel will benefit their respective operations on The Strip. However, both gambling giants acknowledged the potential downside of losing the two iconic Las Vegas casino properties.
Due to its center-Strip location, size and overall historical significance, The Mirage closure is more impactful to both MGM and Caesars. The two gaming companies operate 16 casino hotels and five non-gaming hotels within a small radius of the former Mirage property.
Last month, gambling analysts suggested Caesars and MGM are the “best positioned” casino operators to capitalize on the dual closings of the Tropicana Las Vegas and Mirage Hotel & Casino. Tropicana had 1,467 hotel rooms while the Mirage had 3,044. The elimination of those hotel rooms represents a collective 4.9 percent reduction in supply on the Strip’s main corridor
Tom Reeg, chief executive of Caesars Entertainment, said he thought the situation, particularly as it relates to the Mirage closure, was a “mixed bag for us,” during a quarterly earnings call on Tuesday afternoon.
“I think it’s helpful in terms of there’s less rooms in the market. We’ll get our share of those rooms,” Reeg said. “But given (The Mirage’s) proximity to our existing properties, we think that it served as a feeder to our other assets. If you stayed at Mirage and if you went walking, you probably ended up at one of our properties.”
MGM Resorts, which sold The Mirage to Hard Rock International for $1.1 billion in 2022, was slightly more optimistic about its prospects in the wake of its former property shutting down.
“I think we’re ideally positioned, particularly given that we know those customers. Remember, we retained part of that database,” Bill Hornbuckle, president and CEO of MGM Resorts, said during Wednesday’s second-quarter earnings call. “And so leaning into them and being able to move them over, we think, is meaningful.”
As for the Tropicana closure, Hornbuckle felt confident that MGM would pick up a significant portion of those displaced customers as well. MGM operates three casinos — Luxor, Excalibur and New York New York — in the immediate area that Hornbuckle felt could accommodate the value-centric customer base.
The MGM Grand and Park MGM would pick up some of the mid-tier customer demographic, he said.
“I think there, it’s a pure leisure play on that corner. It was clearly a value proposition,” Hornbuckle said.
In a July 2 note to investors, Las Vegas-based John DeCree, director of equity research at CBRE Group Inc., a commercial real estate firm, suggested Caesars and MGM have several key advantages over their competitors. Namely, Decree wrote, the two gambling companies have ample room inventory, desirable center-Strip locations and greater appeal to “price sensitive” guests.
MGM has 37,243 rooms on the main resort corridor, representing 40.4 percent of the supply. Caesars has 20,630 hotel rooms on or near the Strip, or 22.4 percent of the total supply.
“While there are many variables that could impact our analysis, we see a clear benefit for all Strip operators with more customers chasing fewer rooms and ultimately driving higher (average daily rates),” DeCree wrote last month.
David Danzis can be contacted at ddanzis@reviewjournal.com. Follow him on X at AC_Danzis.
