Posted on: February 25, 2022, 11:51h.
Last updated on: February 25, 2022, 12:47h.
Resorts World Las Vegas is taking longer-than-expected to ramp-up, potentially weighing on operator Genting Berhad’s hopes to leverage the asset to wring more profits out of the US.
The $4.3 billion Resorts World Las Vegas, which is the Strip’s most expensive integrated resort in terms of construction costs, opened last June. In the fourth quarter, the venue generated $170 million in revenue on earnings before interest, taxes, depreciation and amortization (EBITDA) of $23 million. That’s down from sales of $175 million and EBITDA of $27 million in the third quarter.
Given consensus expectations of a continued ramp-up in RWLV, this performance might come as a negative surprise,” said Nomura analysts Tushar Mohata and Alpa Aggarwa in a note to clients.
Occupancy rates were strong in the final three months of 2021, prompting analysts to speculate that revenue at the integrated resort likely declined on a quarter-over-quarter basis because room prices were trimmed.
Resorts World Las Vegas Trying Investors Patience
The Genting venue, the first newly minted Strip property in over a decade, is situated at the northwest end of the Strip, where the Stardust Casino was previously located.
Its initial results are mixed, potentially weighing on Genting investors’ view of the operator’s Las Vegas foray. In the first six months of operation, Resorts World Las Vegas notched revenue of $346 million on EBITDA of $50 million. Nomura forecast sales of $245 million on EBITDA of $57 million.
Prior to the venue opening, analysts forecast that the new integrated resort won’t be fully ramped on an EBITDA basis until 2024. They also predicted that it will take that long for the property to reach the optimal capacity of 85 percent to 90 percent.
Genting notes that the Strip integrated resort was cash flow positive in the fourth quarter, and that it “continues to build its base of business and databases.”
As is the case with any new business venture, timing is critical for new gaming properties. By no fault of its own, Resorts World Las Vegas had bad timing – launching in the midst of the coronavirus pandemic, and before the delta and omicron variants emerged.
Related restrictions and sluggish convention business across the Strip are prime factors in the venue’s slow start.
Management mentioned that the business suffered slightly from imposition of the face mask mandate at public indoor places by the state of Nevada from 30 July 2021, some convention cancellations and weekday business softness,” said the Nomura analysts.
Nevada’s indoor mask mandate was scrapped on Feb. 10.