Morgan Stanley research challenges Las Vegas consensus

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Morgan Stanley research challenges Las Vegas consensus

Research from Morgan Stanley exploring the Las Vegas gaming market shows it might be underestimated by consensus, and is actually doing better than how many feel.

Based on channel checks, the group said occupancy rebound wasn’t as high as it should be. Morgan Stanley feels March has likely already surpassed consensus’ second-quarter estimate of a 60% rebound.

The report continues to show that in Morgan Stanley’s view, data from consensus was also undervaluing Vegas’ revenue by 14% in 2021 and 2% in 2022.

This was similar for the estimated EBITDA for the market, with Morgan Stanley estimating 28% higher for 2021 and 9% for 2022.

Morgan Stanley visited Las Vegas last week and saw with its own eyes on the ground how the area was performing; its report also includes images to defend its claim and shows high footfall in certain areas.

In its experience, it saw the South Strip was busier than the North Strip, as the market still lacks convention visitors. Visitors who did attend were “lower-quality leisure customers” but still demonstrated demand in Vegas.

According to the report, the market is running at a 95% occupancy on weekends and midweek occupancy has increased to 50%-60%, compared to February’s 30%.

The group forecasts that May and summer should see further improvement, as the market expects Covid-19 restrictions to ease. And with big events being planned for 2022, the market can expect strong performance next year too.