Tropicana and Mirage Closures Spell Good News for Las Vegas Casino Giants

By Jane Shaw Senior Editor Updated: 07/13/2024

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We count on Jane to inform our readers about the latest slot games in the US market. With her passion for video games and a degree in engineering, she’s our gambling tech expert. Jane’s also active in our blog section, where she tackles the curiosities and changes in the industry.

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Las Vegas Casino Closures

According to recent reports, two major casino operators are set to benefit from the closure of two iconic Las Vegas hotels. The Las Vegas Strip is undergoing huge changes following the closure of the two landmark casinos, which are Tropicana Las Vegas, which has already closed, and the Mirage, which is set to close later this month.

It is claimed that the closures are set to benefit leading casino operators Caesars Entertainment and MGM Resorts International, although some other casino hotels might also benefit. This is according to analysis from gaming experts.

Reduction in Room Availability

John DeCree, a director at CBRE Group Inc. specializing in equity research, indicated that the reduction in hotel room availability would drive up average daily rates, which could then boost revenue margins for the remaining casino resorts.

With Tropicana and Mirage removed from the equation, the Las Vegas Strip will lose 4,511 hotel rooms, accounting for a 4.9 percent dip in the corridor’s total room supply.

The Las Vegas Review-Journal reports,

In a July 2 note to investors, Las Vegas-based John DeCree, director of equity research at CBRE Group Inc., a commercial real estate firm, says the two gaming giants have several key advantages, including ample room inventory, desirable center-Strip locations and greater appeal to “price sensitive” guests.

These two gaming giants control nearly two-thirds of the main resort corridor’s accommodations, with MGM holding 37,243 rooms (40.4 percent) and Caesars 20,630 rooms (22.4 percent). Their central locations and larger room capacities will enable them to accommodate a large part of the demand for rooms, which could mean improved market share and profitability.

CBRE’s analysis projects that MGM could see an annualized increase in earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) ranging from $69 million to $102 million. Caesars could see a boost of $31 million to $49 million in incremental EBITDAR, capitalizing on the heightened demand and reduced competition.

The Mirage is expected to have a more pronounced impact on the Las Vegas Strip, according to some industry officials. In 2023, the Mirage recorded around one million occupied room nights, contributing $596 million in revenue and $169 million in EBITDAR. Its closure means not just a reduction in room numbers in the area but also a significant change in revenue streams within the sector.

Potential Challenges Ahead Due to Closures

Despite these gains for Caesars and MGM, the closures also pose potential challenges, especially during large-scale events and peak tourist weekends when high occupancy rates could limit room availability.

Some believe that budget-conscious travelers may turn to alternatives like The Strat, which could see a boost in occupancy due to its more affordable pricing. On the luxury end, high-end guests are expected to choose hotels such as Wynn’s two properties.

Analysts estimate that Wynn could gain additional EBITDAR ranging from $8.7 million to $31.4 million due to these changes. Similarly, Golden Entertainment, which owns The Strat, could see an increase in EBITDAR between $2.5 million and $4.5 million, benefiting from the redistribution of guests along the Strip.