MGM Resorts International expects Bellagio and New York-New York to be the company’s first two properties to reopen on the Las Vegas Strip, but a date is still unclear, acting CEO Bill Hornbuckle said Thursday.
However, Hornbuckle said the company’s two properties in Mississippi, Beau Rivage in Biloxi and Gold Strike in Tunica, will open sooner after Mississippi Gov. Tate Reeves said Thursday the state’s casinos will open by Memorial Day.
Hornbuckle, in his first quarterly conference call with analysts since taking over as CEO on March 22, said the company is working through a reopening and safety plan for its more than two dozen casinos in eight states that were closed in the middle of March in response to the COVID-19 coronavirus pandemic. He said the plan – which covers new guidelines on personal protective equipment, social distancing, sanitizing, and crowd management – will be published in the next two weeks.
MGM said the casino shutdowns led to a 29.1% decline in first-quarter revenues and forced the furloughs of 63,000 employees across the U.S., but the impact has been felt particularly hard in Nevada, home of the company’s corporate headquarters and 13 of its gaming and non-gaming properties.
“We’re the largest employer and the largest taxpayer in Nevada. Gaming is the most important industry in the state,” Hornbuckle said. “It is still premature to predict the opening dates of our domestic properties. In the meantime, we are collaborating with public health officials, experts in epidemiology and biosafety, and both state and federal governments to come up with a set of protocols that will help deliver a safe, secure environment for our employees and guests.”
Nevada Gov. Steve Sisolak on Thursday extended the state’s stay-at-home order until May 15, which included the closures of casinos and nonessential businesses.
Hornbuckle said casinos could be in the next phase under the governor’s plan.
The idea behind potentially beginning the reopening with the 2,000-room New York-New York and the 4,000-room Bellagio was strategic, according to Hornbuckle, since it would cover the low end and high end of the company’s market bases.
“It will be leaner and simpler,” Hornbuckle said. Only a certain number of rooms will be made available, and restaurants will not be full service but will offer various pick-up options.
Bill Hornbuckle, president of MGM Resorts International photographed for Premier Magazine on August 15, 2017. (R. Marsh Starks / UNLV Creative Services)
“We expect to implement a phased reopening strategy based on expectations for demand, ramp-up speed, and cash outflow minimization by specific property and region while balancing the needs of our employees, local regulators, and other stakeholders,” according to a statement in the company’s first-quarter investor presentation.
Hornbuckle said he expects regional and drive-in markets to rebound from the closures more quickly. A recovery in Las Vegas is based largely on increased airport passenger volume and the willingness of casino consumers to travel.
He expects the company’s Empire City Casino, just outside New York City in Yonkers, to be one of its last properties to reopen, considering how the pandemic has impacted the state.
Financial performance
MGM pre-announced earnings a week ago when the company raised $750 million in new debt. MGM’s revenues for the quarter that ended March 31 were $2.25 billion, which included a 20.6% decline in revenues from its Las Vegas properties. In Macau, MGM’s revenues declined 63% during the coronavirus outbreak in China.
Consolidated cash flow fell 60.1%, and MGM suffered a net loss of $231.8 million.
Hornbuckle highlighted MGM’s liquidity, which is helping the company manage a cash burn of roughly $270 million a month with zero revenue coming in from its casino operations. The company said it has $4.6 billion in cash on hand and access to an additional $1.4 billion from its operating partnership units with real estate investment trust MGM Growth Properties.
“We accessed the debt capital markets to bolster our liquidity position and amended our credit agreement to provide for additional flexibility with respect to our financial covenants,” MGM CFO Corey Sanders said. “As such, our balance sheet remains sound.”
Hornbuckle called the impact of coronavirus on Nevada and the U.S. “unprecedented.” He added that MGM was challenged to deal with the crisis and had “lost 11 of our own” to the virus.
Las Vegas
Hornbuckle wouldn’t predict which of the company’s Las Vegas properties would reopen after the first two but said steps are already being taken to ready for additional phases. Both Aria and Park MGM are getting new carpeting, and casino layouts will be altered to suggest social distancing strategies.
“People will notice the difference from day one,” he said.
Entertainment venues will be brought back slowly. He cited comedian Carrot Top, who performs in a small theater inside Luxor Las Vegas, as a headliner that could return relatively easily, because he is a solo act. The Cirque du Soleil production shows, however, would be more of a challenge.
“The idea that we’ll get 15,000 at T-Mobile Arena for a concert at any time this year is probably a stretch,” Hornbuckle said, which is news that might disappoint Las Vegas hockey fans. The NHL’s Vegas Golden Knights play at the arena behind New York-New York and normally draws in excess of 18,000 fans.
Still, Hornbuckle said MGM has been in discussion with different leagues about holding televised games in its venues without fans in attendance.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
