Skift Take

MGM Resorts is riding high after a record-breaking first quarter. CEO Bill Hornbuckle’s bold bet on a Marriott partnership and on expansion in China and Japan appear to be paying off in spades.

Sean O’Neill

 MGM Resorts executives enthused Wednesday about the likely impact of their newly minted licensing deal with the Marriott Bonvoy loyalty program.

“The Marriott deal is off to a great start,” said William Hornbuckle, president and CEO, on an earnings call. “We booked approximately 75% above expectations. One of the biggest surprises has been the gain in group business. They do know a lot of people we don’t know.”

Starting in mid-March, guests at MGM Resorts’ properties — which include brands like Bellagio, MGM Grand, ARIA, Mandalay Bay, and Borgata — were able to earn and redeem points in the Marriott Bonvoy loyalty program.

The launch of the licensing deal exceeded the executives’ expectations in the company’s first quarter. More than 130,000 room nights were booked.

The company expects this strategic relationship to be a significant growth driver for the year, said Corey Sanders, chief operating officer.

MGM Resorts expects to rake in at least $50 million in extra revenue this year by making about 37,000 rooms at 16 U.S. hotels bookable via Marriott International‘s website and app.

MGM Resorts’s first quarter

• It produced a net income of $217 million, compared to $467 million a year earlier, impacted by a prior-year gain on the sale of Gold Strike Tunica.

• Las Vegas Strip Resorts saw record first-quarter net revenues. The company enjoyed pricing power, with an average nightly rate of $258, up 7% year-over-year. Strip hotels provide the majority of the company’s earnings.

• MGM Resorts said its hotel occupancy in Las Vegas was 93% during the period.

Beyond The Strip

Las Vegas wasn’t the only ace up MGM’s sleeve. The company has bet on growth outside its U.S. home.

• MGM China achieved record first-quarter results, with a 78% year-over-year jump to $1.1 billion in adjusted property EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent or restructuring costs) — a metric used to exclude the effects of lease expenses and other erratic expenses.

• In Japan, MGM Resorts’s planned integrated casino-resort venture in Osaka completed the country’s largest-ever project financing. That said, some skeptics continue to doubt when or if Japan will ever open a casino resort, given years of delays.

• The main limit on capital-intensive expansion is debt and financing costs. As of March 31, MGM Resorts had $6.27 billion in long-term debt. The net cash flow provided by operating activities was $549 million in the first quarter.

MGM Resorts CEO and President William Hornbuckle will appear on-stage at the Skift Global Forum in New York City in September 2024.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

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