Resorts World Las Vegas Ramp Up Could Take Until 2024, Says Research Firm

Posted on: May 20, 2021, 11:11h. 

Last updated on: May 20, 2021, 01:01h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Resorts World Las Vegas opens in just a few weeks. But it’s going to take some time for the $4.3 billion integrated resort to fully ramp up and turn a profit.

Resorts World Las Vegas
Construction at the Resorts World Las Vegas site. A research firm says the venue will be fully ramped up in 2024. (Image: Las Vegas Review-Journal)

The first Nevada venue of Malaysian gaming consortium and industrial conglomerate Genting Berhad is likely to be a long-term growth driver for the company. But getting there is going to take a while, according to analysts.

With the lingering uncertainties of the COVID-19 pandemic, we expect Resorts World Las Vegas to initially operate at 40 percent to 50 percent capacity — we expect Resorts World Las Vegas to achieve optimal capacity of 85 percent to 90 percent from 2024 onwards,” said UOB Kay Hian Research analysts in a recent report.

The newest Strip venue will be the third-largest in the Genting portfolio, following property in its home country and Resorts World Sentosa in Singapore.

The 3,506-room hotel-casino will feature three Hilton-branded lodging concepts and more than 40 food and beverage choices.

May Be Good Timing for Resorts World Las Vegas

At the aforementioned $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 (ROI). 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 integrated resorts.

The Genting venue, the first newly minted Strip property in over a decade, is situated at the northwest end of the Strip, where the Stardust Casino was previously located. It could also be the beneficiary of some good timing.

While the largest domestic gaming hub is still shaking off the effects of the coronavirus pandemic, signs are mounting that momentum is building. Some operators are saying weekend occupancy is slated to be at or near 100 percent over the course of the summer. Adding to the Strip rebound case is the return to 100 percent gaming capacity and expectations for a busy convention schedule in 2022.

UOB Kay Hian Forecast Not Unreasonable

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 integrated resorts 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 (EBITDA) 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 recoup its investment in the property, using a net present value enhancement of $1 billion, according to the research firm.