An industry expert who closely monitors the gaming sector and conducts weekly assessments of room rates for various Las Vegas Strip resorts has revealed that hotel room rates for November’s highly anticipated Formula One Las Vegas Grand Prix race are not experiencing the same level of growth as last year. Barry Jonas, a gaming analyst at Truist Securities in Atlanta, shared with investors in a recent report that MGM Resorts International’s projection of sluggish room rate growth during the Formula One event seems to be on track.
According to Truist’s research, leading up to the race on November 23, room rates at MGM properties range from $200 to $800 per night, while rates at Caesars resorts fall between $150 and $400 per night. This represents a significant decrease from last year when rates at MGM were between $500 and $1,400 per night, and Caesars rates ranged from $150 to $600 per night.
The drop in rates translates to an estimated $30 million decline for MGM when compared to the previous year, a figure that could potentially improve as the race date approaches. Jonas noted in his report, “We have been monitoring F1 weekend rates for seven weeks now, and rates appear to have stabilized recently, with no clear indications of improvement or deterioration during that period.”
MGM had forewarned of lower room rates as early as July, with CEO Bill Hornbuckle acknowledging in the company’s second-quarter earnings call that rates were likely to be lower than the previous year. Hornbuckle pointed to two factors that could impact this year’s Formula One race: the presence of a Las Vegas Raiders home game on the same weekend and the new marketing collaboration with Marriott International, which has brought in new guests and revenue for MGM properties.
Hornbuckle remarked, “I think the real issue with Formula One is it’s off to a soft start compared to last year, where we had a lot of advanced bookings. I think you can see some decline in our average daily room rates, about 50% lower.” However, he expressed optimism about the Raiders’ home game against the Denver Broncos on November 24, the day after the race, which could potentially boost occupancy at MGM’s southern Strip properties.
While acknowledging the challenges of replicating the success of the inaugural race, Brendan Bussmann, a gaming industry analyst at B Global in Las Vegas, emphasized that the industry was well aware of the obstacles in maintaining the same level of excitement and demand as the previous year’s event.