Earnings Boost on the Horizon for Las Vegas Strip Casino Operators Amid Tropicana and Mirage Closures

The Las Vegas Strip is poised for a significant shift in its competitive landscape with the imminent closures of Tropicana Las Vegas and The Mirage Hotel & Casino, resulting in a 4.9% reduction in total room supply. This contraction offers a unique near-term earnings catalyst for major casino operators, positioning them for potential revenue growth.

Key Highlights:

1. MGM Resorts International Dominance: With nearly 37,000 rooms across 13 properties, MGM Resorts International (NYSE
   ) stands to gain significantly from the reduction in room supply. Notable properties include Luxor, Aria, and Bellagio.
2. Caesars Entertainment and Wynn Resorts: Other major players such as Caesars Entertainment and Wynn Resorts (NASDAQ
   ) are also expected to benefit from the increased demand.
3. Analyst Insights: CBRE Equity Research highlights The Mirage's closure as a major impact, citing its substantial contribution of ~$596M in revenue and $169M in EBITDAR in FY23.
4. Market Sentiment and Performance: Despite low investor sentiment due to inflation and macroeconomic uncertainty, the Strip's fundamental performance remains robust, supported by high consumer spending and a strong event calendar.
5. Forward Estimates: Analysts believe current estimates may be overly conservative, suggesting a potential lift in investor sentiment and earnings as the year progresses.