The initial reopening of the Las Vegas Strip was relatively good for casino operators in early June, but abysmal room rates and a second wave of the COVID-19 outbreak appear to have wiped out hope that the Vegas recovery will continue soon. .
Las Vegas Sands Corp.(NYSE: LVS), management told investors this week that Vegas is suffering “a world of pain,” and that the US gaming center has a long way to go to recover from its closure, according to BofA. Securities.
The numbers: Prices for hotel room rates on the Las Vegas Strip for the month of August are down 40% from a year earlier. Pricing conditions on the Strip have worsened since June 12, when August rates dropped just 31%. September prices are also down 37% year-over-year, suggesting a small improvement toward fall.
Vegas Strip operators Las Vegas Sands, MGM Resorts International (NYSE: MGM), Wynn Resorts, Limited (NASDAQ: WYNN) and Caesars Entertainment Corporation (NYSE: CZR) are being hurt by falling room prices, BofA analyst Shaun Kelley said in a note.
Las Vegas Sands recently closed the Palazzo to book during the weekday after mid-week occupancy levels fell to 25% or less.
“We see little reason to think that these operational challenges are unique to LVS and we have seen recent WYNN licenses in addition to layoffs at the Tropicana and Circus Circus,” Kelley said Friday.
Somber prospect: BofA estimates that Las Vegas Sands will have the least impact on room rates in August, 13% less than a year ago. Kelley said Wynn will take the biggest hit, with a room rate of 52%.
Las Vegas Sands management said this week there is no evidence that investors can expect the city group and the convention business to return soon.
KAYAK flight search data for Las Vegas has reportedly dropped 68% from a year ago. Clark County, Nevada reported more than 1,000 new cases of COVID-19 on Thursday for the fifth day in the past week.
The taking of Benzinga: The two most important questions for Las Vegas casino stock operators right now is whether the reopened casinos will remain open and how long will it take for travelers to return?
For long-term investors looking to play the recovery, Bank of America has the following ratings and pricing targets for the major Las Vegas casino operators:
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Las Vegas Sands, $ 61 buy and target rating.
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Wynn, $ 95 buy and target rating.
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MGM Resorts, underperforming rating and $ 15 target.
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