MGM Resorts International on Thursday gave a preview of its reopening plan for its Las Vegas properties as the city inches closer to a restart date.
MGM will start with just two of its properties when Las Vegas is safe for guests—most likely New York-New York Hotel & Casino and the Bellagio—CEO and President Bill Hornbuckle said on the company’s earning call on Thursday evening. The properties, chosen to allow guests of different budgets to come into the city when it’s deemed safe, will be the starting point for MGM as the city starts the road back to normalcy.
“And then from there, we’re talking about what other properties should open, if any, at that point in time. And we’ll go slow. We’ll be responsive and responsible,” Hornbuckle said. “We’re going to see how the market responds.”
MGM, in addition to New York-New York and the Bellagio, owns the Aria, Excalibur, Luxor, Mandalay Bay, Mirage, and the Park MGM resorts in Las Vegas in addition to the T-Mobile Arena, in which it owns a 42.5% stake. Hornbuckle said that most of the company’s Las Vegas properties need to be somewhere between 30% to 50% occupancy to generate any kind of meaningful profit.
When the properties do open, MGM expects to have protocols in place to make its guests feel as safe as possible.
“We’re going to be following a lot of the protocols like many of our competitors are,” Corey Sanders, CFO of MGM, said on the call. “We’ll have the supplies, the gear we’ll need, and the distancing we will need. We’re sizing that up right now.”
Who will return to Las Vegas first?
Hornbuckle also said that, as have others, MGM believes driving traffic will come into the city first, though “getting air back and getting large group gatherings are critical to the ultimate and final recovery.”
“We do believe because of driving traffic, which particularly spikes in the summer, that regionally, we will see a substantial amount of drive-in. I mean there’s obviously a pent-up demand,” he said. “I think you will see leisure demand. I think you will see drive traffic, and it will push what happens from that perspective.”
Hornbuckle also mentioned that the company has been in communication with airlines about how they’re going to return some routes to Las Vegas when they’re able. While some of the major U.S. carriers, including United, American, and Delta, may restrict service to Las Vegas, others, like Southwest, “feel relatively bullish” on the city.
“They won’t start here first, but I think over time, you’ll see them focus on the market because, as always, in these circumstances, Las Vegas presents a great deal of value.”
MGM expects that group business and the giant-events that Vegas is known for, from music festivals to prize fights, will come back last.
“The idea that we’re going to get 15,000 people in T-Mobile for a concert anytime this year is probably a stretch,” Hornbuckle said.
Still, there are some encouraging signs as half of the group business that has been cancelled because of the COVID-19 spread has already been rebooked over the next 12 months, which is encouraging long-term.
MGM also already has more rooms booked, comparing year-over-year, for 2021 than it did at the same point for 2019 and 2018.