Dive Brief:
- During a first-quarter earnings call with analysts Wednesday, MGM Resorts International CEO Bill Hornbuckle said the resort operator’s partnership with Marriott International’s Marriott Bonvoy loyalty program is already exceeding both companies’ expectations.
- With the collection, which began accepting reservations in March, Marriott has converted more than 30,000 rooms at MGM properties in Las Vegas under its reservation system.
- MGM posted its highest-ever Q1 net revenues of $4.4 billion, up 13% year over year. Hornbuckle cited strong luxury performance in Las Vegas as a factor in its “record” Q1 — and teased a forthcoming development along the Strip.
Dive Insight:
Since the MGM Collection with Marriott Bonvoy launched in March bookings have exceeded “approximately 75% over our expectations,” Hornbuckle said.
The partnership has over 130,000 room nights booked, and MGM expects the relationship will be a growth driver in 2024, according to a release.
Cautioning that it’s still early days, Hornbuckle said rooms booked through Marriott Bonvoy were garnering approximately $150 more when broken down between rate and on-property spend.
Luxury properties, particularly in Las Vegas, were key to MGM’s success in the quarter. “Our luxury resort offerings on the Strip served as a distinct competitive advantage, driving top-line growth of 5% during the quarter,” said CFO Jonathan Halkyard on the earnings call.
“At the high end, we make roughly 75% to 80% of our adjusted property EBITDAR,” Hornbuckle said. “The idea of a luxury campus and being focused on the epicenter of activity here has paid off, and we feel will continue to.” Overall, ADR was up 7% year on year in the first quarter, he added.
Also in Vegas, Hornbuckle hinted at a forthcoming development that will “tie up the front end of the Strip to The Cosmopolitan, creating what we truly hope is a luxury campus,” though MGM is saving more details about the project until next quarter.
In the first quarter, the Greater China market was the biggest factor in MGM’s revenue growth, with the company seeing 80% year-on-year growth in Macau following the easing of pandemic-related entry restrictions to the region.
Q1, however, was not without its challenges. Operational costs at properties in Las Vegas and Detroit rose on the heels of newly negotiated union contracts, and Hornbuckle said Detroit was “particularly impacted” by weather.
Hilton, Marriott and Caesars Entertainment also cited weather as a negative factor in their first-quarter earnings calls.
