Resorts World Las Vegas coming soon but may take time to turn a profit

The first Nevada property of Malaysian gaming giant Genting Berhad is likely to be a long term growth driver for the company. But getting there is going to take some time, according to analysts.

“With the lingering uncertainties of the pandemic, we expect Resorts World Las Vegas to initially operate at 40% to 50% capacity — we expect Resorts World Las Vegas to achieve optimal capacity of 85% to 90% from 2024 onwards,” said UOB Kay Hian analysts in the latest report.

With $4.3 billion price tag, Resorts World Las Vegas is in the upper pantheon of recently developed US gaming properties. That’s a stratosphere in which operators must prioritize return on investment. While that goal differs from company to company, it’s typical for gaming firms to push for low double-digit to high teen ROI percentages from multi-billion dollar IR.

While Las Vegas is still getting rid of the effects of the pandemic, signs are mounting that momentum is building. Some operators are saying weekend occupancy is slated to be at or near 100% over the course of the summer. Adding to the rebound case is the return to 100% gaming capacity and expectations for a busy convention schedule next year.

UOB Kay Hian’s expectation that Resorts World Las Vegas won’t be fully ramped until 2024 isn’t outlandish. It usually takes multiple years for high-end IR to reach optimal capacity. Additionally, other research firms have similar views.

In March, Nomura analysts said it will be several years before the venue reaches net profitability. Fitch Ratings said the property won’t be fully ramped on earnings before interest, taxes, depreciation and amortization basis until 2024.

UOB Kay Hian forecasts Resorts World Las Vegas generating $399 million in EBITDA in 2024. On that basis, it would take more than a decade for Genting to make up its investment in the property, using a net present value enhancement of $1 billion.

Editing by Rachel Hu