Casino Hotels - International - April 2009

Casino Hotels - International - April 2009

About this report



This report reviews recent developments in the casino hotel sector and offers insights into future trends for the industry. Following an overview of some macroeconomic trends (including the outlook for spending on travel and tourism), the report proceeds to review developments in the major casino destinations, including Atlantic City, Las Vegas and Macao. The following section deals with some of the specific characteristics of casino hotels, as compared to other types of lodging properties. In particular, casino hotel revenue management is explored. The next section consists of a review of the profiles and latest developments of the major US casino hotel operators, such as Harrah’s, Sands (Las Vegas Sands Corp), MGM Mirage, Wynn Resorts and some smaller European-based operators, including Lucien Barrière and the Société des Bains de Mer of Monaco. The final section summarises the outlook for the future of the sector.

While the scope of this report is international, it does not pretend to be comprehensive. Coverage is limited to major dedicated gaming hotels, for the most part, operated by the principal chains specialising in the gaming segment of the hospitality industry.
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Contents



Introduction
Key findings
Data Sources
Overview
Growth outlook
Figure 1: Forecasted GDP growth rate by region and major country, 28 January 2009
Outlook for growth in spending on travel and tourism
Figure 2: Travel and tourism expenditure worldwide, 2008-18
Trends in wealth accumulation
Major Gaming Destinations
Atlantic City
Casino hotel performance
Figure 3: Performance of Atlantic City casino hotels, 2006-08
Las Vegas
Stagnating visitation
Figure 4: Trend in visitor frequentation and hotel performance in Las Vegas, 2000-08
Macao
Mainland Chinese the dominant source market
Market liberalised in 2002
Sociedade de Jogos de Macao
Joint venture with MGM
Recent casino developments
Hotel capacity and performance
The Macao gaming market
Figure 5: Net gaming revenue market share in Macao, first half of 2008
Outlook dims for Macao
Speculation surrounding the restrictions
Specific Characteristics of Casino Hotels
Revenue management
Comparison with conventional hotels
Casino hotel guest segmentation
Room rates are treated as a residual
Optimising profits – not only maximising revenues
Rainmaker
Profiles of the Major Casino Hotel Operators
Boyd Gaming Corporation
Figure 6: Boyd Gaming’s property details, 31 December 2007
Boyd may acquire Station assets
Station plans to file for Chapter 11
A bondholder is suing
Three possible outcomes
Station targets the ‘locals’ market
Valuation and financing
Harrah’s Entertainment
Bought out by private equity
Harrah’s properties
Figure 7: Harrah’s property details, 31 December 2007
Harrah’s Indian casinos
Harrah’s warns of debt squeeze
Financial pressures could impact customer experience
Weak capital structure due to a highly leveraged buyout
Las Vegas Sands Corp
The Venetian Resort-Hotel-Casino
Recent hotel performance
Figure 8: Las Vegas Venetian Q4 hotel performance data, 2008 versus 2007
The Palazzo Resort-Hotel-Casino
Recent hotel performance
Figure 9: Las Vegas Palazzo hotel performance, Q4/2008
Sands Macao
Recent hotel performance
Figure 10: Sands Macao Q4 hotel performance data, 2008 versus 2007
The Venetian Macao-Resort-Hotel
Recent hotel performance
Figure 11: Venetian Macao Q4 hotel performance data, 2008 versus 2007
Four Seasons Macao
Fourth-quarter operating results
Development projects
Figure 12: Sands’ revised development plan, January 2009
Lucien Barrière
A one-third market share in gaming
15 hotels
Figure 13: Lucien Barrière’s hotels, 2008
Figure 14: Revenue breakdown*, 2008
Infiniment Barrière
MGM Mirage
Nevada properties outside Vegas impacted by Indian reservation casinos
Casino properties outside Vegas draw on regional markets
Figure 15: MGM’s casino hotel portfolio at end 2007
MGM looking to sell more assets to relieve debt load
Treasure Island sold
Morgan Stanley has been hired
Société des Bains de Mer
Soaring profits through early 2008
Trump Entertainment
Figure 16: Trump’s casino properties at 31 December 2007
Heading back into bankruptcy
Missed payments
Wynn Resorts
What can Wynn do for an Encore?
Leisure facilities
A more intimate gaming atmosphere
Upmarket retailing and meeting space
Badly timed market entry
Wynn Macau
Wynn implements efficiency initiatives in Las Vegas
A sharp drop in fourth-quarter results
Weakness in Vegas
Fourth-quarter EBITDA down by two thirds
Casino revenue down sharply
Food and beverage revenues down
Wynn Macau 2008 operating results
ADR and RevPAR up for the year 2008
Wynn Macau fourth-quarter results
ADR up, but RevPAR flat in Q4/2008
Equity raised
What Next?
A sharp drop-off in the US in Q4/2008
Figure 17: US monthly casino hotel performance, year on year, September-December 2008
The US consumer is strapped
Cutbacks on MICE expenditure
Europe faring far better so far
Figure 18: European monthly casino hotel performance, year on year, September-December 2008
Casino hotels – a more broad-based clientele
Singapore to compete with Macao?
Marina Bay Sands
Doubts about the project’s financing
Tiger Airways link
Less capacity in Vegas – the silver lining?
Near-term pipeline cut by 10,000 rooms