Tough times for gambling destinations, expert warns
Posted by Gavin Smith on 22 Jul 2009 at 09:07
The good times are over for traditional gambling destinations, one expert has warned.
CNBC reported one Wedbush analyst said the likes of Las Vegas and its mega casino hotels could be feeling the pinch for years.
Both Vegas and Macao, China, have felt the effects of the global slowdown and slump in leisure travel as people tighten their belts, according to a note to investors written by Rachael Rothman.
According to a CNBC report, the advice said that while some destinations in Vegas have slashed their prices to keep interest high, the continued planned expansion of high-end rooms could negate any potential rebound.
The expert also said demand would have to increase by 10 per cent each year over the next three years to get back to the same levels recorded in Vegas in 2008.
Macau has also had to face off the problems of tighter visa requirements for Chinese visitors, more thrifty players and worries over swine flu.
However, CNBC also said Rothman noted more potential for a comeback in Macau, although not to the boom times had seen in recent history.
She picks out Wynn Resorts Ltd which she had put an 'outperform' rating on, according to CNBC, plus a $39 price target.
The anaylst pointed out that the firm is better positioned for a comeback than similar companies and does not squarely compete for the convention market.
Its healthy balance sheet and ability to repurchase shares if needed to also won her approval.
Elsewhere, Rothman holds an 'underperform' on MGM, saying it faced competition from new developments on the strip.
Rothman's note also pointed to Boyd Gaming, saying it is unlikely to repurchase shares in 2009 and leverage levels are tighter this time around.
Its regional gaming sector has shown tougher skin but she holds an 'underperform' rating on the company's shares.
Finally Rothman holds a 'neutral' rating for Las Vegas Sands due to challenges facing it in Macau and Las Vegas.
The CNBC report also added Rothman noted Las Vegas Sands has a number of chances to improve its balance sheet over the next year including the likes of strategic manoeuvres and selling assets.
