The Nevada Gaming Control Board reported January gaming data for the Las Vegas
Strip. For the month, gaming revenue on the Strip declined 23.9% to $377.8
million from $496.8 million in January 2001. Total drop declined 18% to $4.1
billion, on a 37.5% decline in table game drop and 5.2% decline in slot handle.
Results were weak and represented the worst year-over-year comparison since
September 11. However, results were not surprising given that Chinese New Year
and the Super Bowl, which occurred in January of 2001, did not occur in the
comparable period this year. In addition, January was up against a tough year-
over-year comparison of +7%.
The Strip operators had expected a weak month, and most indicate that actual
results were ahead of budget.
Aggregate hold was virtually unchanged year-over-year. Specifically, a 1.4
percentage point decline in table hold was offset by a 0.7 percentage point
rise in slot win-percent. That said, baccarat hold improved by 10.7 percentage
points, which should benefit MGG, the market’s biggest player in the high-end.
Adjusted for last year’s baccarat hold, gaming win declined 27%.
The table below presents Las Vegas Strip gaming statistics for January:
Source: Nevada Gaming Control Board
OUTLOOK
Our contacts in Las Vegas have indicated that February was a good month due to
the favorable timing of Chinese New Year and the Super Bowl, displaced
convention business from October and November, the Super Bowl, and an easy
year/year comparison (-12.7%).
March is shaping up to be another good month from an events and convention
perspective. While operators have needed to discount rooms over the last few
months to drive occupancy, there are signs of firming in the convention market.
Bellagio returned to normal room rates beginning March 6. The larger casinos
on the Strip will likely follow suit. Other properties positioned to benefit
from increased room rates include Aztar’s Tropicana and Boyd’s Stardust, which
have limited pricing power versus their mega-casino competitors. That said, it
is too early to declare that Las Vegas has returned to normal.
We believe the relative outperformance of the regional gaming markets versus
Las Vegas will reverse in the third quarter of 2002 as comparisons ease going
forward. Prior to this shift, we expect that investors will look to increase
their exposure to the Las Vegas Strip and away from more diversified operators.
The table below presents a breakout of 2001 gaming revenue comparisons on the
Las Vegas Strip and a list of comparable weekend days. https://5g88.app/en/
Source: Nevada Gaming Control Board and Salomon Smith Barney
TABLE GAMES
Total table game revenue declined 43% to $167 million from $293 million in
January 2001. Results were impacted by lower play volume and a 140 basis point
decline in hold. Adjusted for last year’s hold, table games declined 37%.
Table games have suffered since September 11 as high-end and international play
has waned and marketing programs have targeted lower-tier slot customers. The
segment was also impacted by the irregularity of January’s events calendar, as
discussed above.
Baccarat revenue declined 44% to $45 million, or 12% of total gaming revenue.
Results benefited from a very favorable hold percentage of 28.6%, though the
drop was off 65% from last year’s level. February results will likely be
strong due to a solid turn-out for Chinese New Year and an easy comparison.
Excluding baccarat, table game revenue declined 42.5%.
SLOT MACHINES
Slot machine revenue increased 4% to $209 million from $201 million in January
2001. This represents the first month that year/year results improved since
September 11. Results benefited from a 0.7 percentage point increase in slot
win percent to 7.2%, or an estimated $21 million of incremental gaming win.
Slot handle declined 5.2% to $2.9 billion.
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