MGM Resorts' Strategic Moves: Enhancing Market Position

Overview of MGM's Current Strategic Initiatives

MGM Resorts is advancing its strategic initiatives by focusing on sustainable free cash flow, expanding its digital and luxury resort investments, and enhancing shareholder returns. Key moves include a partnership with Marriott Bonvoy and entry into the Brazilian market, positioning MGM for growth and improved market presence.

"We're excited by the progress we're making as a company against our strategic priorities and anticipate carrying our current momentum forward into the back half of the year. We continued to deliver on our Free Cash Flow growth algorithm in the second quarter, driving strong financial returns thanks to a solid baseline of cash flow from our domestic resorts, the continued growth of our digital business, and the resumption of dividends from MGM China, said Jonathan Halkyard, CFO and Treasurer of MGM Resorts International." --- (MGM, press release, 2024/07/31)

"Our strategic growth plan to drive sustainable free cash flow from our resort operations, develop free cash flow by investing in international digital and luxury integrated resorts, and return capital to shareholders through share repurchases continued to develop in the first quarter of 2024, said Bill Hornbuckle, Chief Executive Officer & President of MGM Resorts International." --- (MGM, press release, 2024/05/01)

"across each of our markets. We also have seen a full recovery at MGM Detroit, which we all know it faced headwinds since midway through last year.Margins were within our targeted range of the low 30s as we remain vigilant on improving our variable labor effectiveness and executing on revenue initiatives such as our expanded air charter program, just one of many examples.In Macau, MGM China net revenues grew 37% year-over-year, achieving a market share of 16%." --- (MGM, earning call, 2024/Q2)

"MGM Collection with Marriott Bonvoy is the groundbreaking strategic alliance between MGM Resorts International and Marriott International, and participates in Marriott Bonvoy®, the global travel program from Marriott International." --- (MGM, press release, 2024/08/27)

""MGM Resorts is committed to becoming the world's premier gaming entertainment company, and this strategic alliance with Grupo Globo, and entry into the Brazilian market, is a landmark step forward and key milestone in our growth strategy," said MGM Resorts CEO & President Bill Hornbuckle." --- (MGM, press release, 2024/08/15)

Market Trends Influencing MGM's Strategy and Positioning

MGM Resorts is strategically enhancing its market position by focusing on digital engagement through partnerships, like with Viral Nation, and capitalizing on growth in key markets such as Macao. The emphasis on both gaming and non-gaming demand in Las Vegas further reflects their adaptive strategy to evolving market trends.

"Viral Nation, a leader in Social-First transformation, renowned for its expertise in creating impactful campaigns and fostering authentic connections between brands and consumers, will collaborate with MGM Resorts to amplify the brand's presence and engagement within the rapidly evolving digital landscape." --- (MGM, press release, 2024/06/11)

"I believe Macao market gross gain revenue will exceed $30 billion next year and continue to grow year after year. Our business strategy is predicated on investing in high-quality assets and also have scale." --- (LVS, earning call, 2024/Q2)

"It's been smaller, but still impactful capital deployment here that has driven all kinds of demand to the market." --- (WYNN, earning call, 2024/Q1)

"There's just a massive amount of demand for Vegas, and that has continued. And if you look at where we're driving, we're driving a lot of it through non-gaming, and gaming is holding up well." --- (CZR, earning call, 2024/Q2)

"Things that are very important include market positioning in markets that we believe have strong potential for growth, overall scale, because this is a business where most of our properties, including our regional properties, are doing north of $200 million annually, the EBITDAR, so scale matters." --- (MGM, earning call, 2024/Q1)

Operational Efficiencies and Cost Management Strategies

MGM Resorts is actively managing labor costs and achieving operational efficiencies by offsetting recent increases in unit labor costs. The company is also exploring strategic agreements to enhance its portfolio with minimal capital investment, reflecting a broader industry trend towards cost management and efficiency.

"We continue to focus on labor efficiencies to manage rising labor costs. General and administrative expenses include items such as information technology, facility maintenance, utilities, property and liability insurance, expenses for administrative departments such as accounting, compliance, purchasing, human resources, legal, internal audit, property taxes and marketing expenses indirectly related to our gaming and non-gaming operations." --- (CZR, sec filing, 2024/Q1)

"Adjusted Property EBITDAR at our Las Vegas Operations increased $14.7 million for the three months ended March 31, 2024, primarily due to an increase in revenues from room and food and beverage operations of $39.0 million and $21.1 million, respectively, partially offset by an increase in operating expenses." --- (WYNN, sec filing, 2024/Q1)

"So I think we've done a good job at offsetting those increases. Going forward, those increases in unit labor costs will be lower than they've been over the past few quarters, as Bill mentioned in his remarks, we're lapping now some of those increases that we incurred due to those new labor agreements and not just in Las Vegas." --- (MGM, earning call, 2024/Q2)

"As we enter into new management and franchise contracts and enter into strategic agreements to complement our hotel portfolio, we expand our business with limited or no capital investment by us as the manager, franchisor or licensor, since the capital required to build, renovate and maintain hotels is typically provided by the third-party owners with whom we contract to provide management services or license our IP." --- (HLT, sec filing, 2024/Q2)

"For each segment, it looks like you all found expense efficiencies this quarter versus last quarter." --- (CZR, earning call, 2024/Q2)

Customer Engagement through Technology and Loyalty Programs

MGM Resorts is enhancing customer engagement through responsible gaming initiatives and technology-driven loyalty programs. Their focus on transparent interactions and partnerships aims to build loyalty and drive growth, similar to successful strategies seen in the hospitality and gaming sectors.

"And so Honors is working. Our customers are engaged more than I think any other program that is out in the industry." --- (HLT, earning call, 2024/Q1)

"So, overall, you can be confident we've got laser-focused on driving engagement because we know it leads to subscriber satisfaction and it leads to lower churn over time." --- (DIS, earning call, 2024/Q2)

"The program focuses on positive, transparent, and proactive engagements with guests and customers about how to gamble responsibly." --- (MGM, press release, 2024/08/30)

"Wagers placed can earn credits towards our Caesars Rewards loyalty program or points which can be redeemed for free wagering credits." --- (CZR, sec filing, 2024/Q2)

"We also announced several new partnerships and additions to our brand portfolio, which will enable us to build even more loyalty with customers and help accelerate growth." --- (HLT, earning call, 2024/Q1)

Competitive Positioning and Differentiation Tactics

MGM Resorts emphasizes its competitive positioning through strong economic performance and market leadership, particularly in Macau. The company focuses on product and service quality as core strengths, which are crucial for differentiation in a competitive landscape.

"I'm not going to comment on specific promotional activity by others in the market, but I can tell you that our reinvestment in any given quarter could move up or down 50 basis points, 75 basis points, something like that based on what we're trying to achieve, but the core of our competitive strength will always be product and service." --- (WYNN, earning call, 2024/Q2)

"We like to understand how much money we're actually making on net. So when you look at the business overall, our margin performance and our competitive positioning is actually quite good given where things are. But I'll turn it over to Grant for some additional detail." --- (LVS, earning call, 2024/Q2)

"Many of them, as you know, are market leading. We have shown and demonstrated now, I think, in Macau, our growing EBITDAR prowess and our ability to have set a whole new plateau of economic performance." --- (MGM, earning call, 2024/Q2)

"category. This attractive traveler continues to gain share within our customer base at a faster pace than any other generation." --- (RCL, earning call, 2024/Q2)

"But the core of our competitive strength remains product and service. And I think you can see that in Q1 with both our results and our margin." --- (WYNN, earning call, 2024/Q1)

Future Outlook and Growth Potential

MGM Resorts is optimistic about future growth, particularly in EBITDAR on the Vegas Strip, driven by organic growth and planned capital investments. Their strategic focus on enhancing market position suggests a strong outlook for continued expansion in this key segment.

"Do you look at the outlook for the rest of this year and believe there is potential for Vegas Strip EBITDAR to grow as you work through the year?" --- (MGM, earning call, 2024/Q1)

"Now, that's organic growth. We do have plans for some additional growth capital investment in Las Vegas mainly, which would increase that growth rate." --- (MGM, earning call, 2024/Q1)

"Robin Farley: Great. Thank you. Just circling back to your outlook for EBITDAR in Vegas growing this year." --- (MGM, earning call, 2024/Q1)

Partnerships and Collaborations in MGM's Strategy

MGM Resorts is strategically enhancing its market position through key partnerships, including ongoing collaborations with the American Gaming Association and the New York Yankees, as well as a significant alliance with Playtech to deliver innovative live casino content, ensuring a commitment to player protection and immersive experiences.

"Also, MGM Resorts continues in its partnership with the American Gaming Association's (AGA) Have A Game Plan." --- (MGM, press release, 2024/07/10)

"As we continue working to secure a full commercial casino license at Empire City, this partnership allows us to further develop these properties to their potential, while providing the world-class hospitality guests have come to expect from the MGM Resorts brand. Michael Tusiani, New York Yankees Senior Vice President of Partnerships, said, 'We are excited to partner with MGM Resorts this season.'" --- (MGM, press release, 2024/07/10)

"Both Playtech and MGM Resorts are dedicated to maintaining the highest standards of player protection and ensuring our offerings are enjoyed responsibly. As the technology partner of MGM Resorts, Playtech will be providing players with on-demand, online access to a combination of next-level, immersive entertainment experiences directly from two of the industry's landmark, exclusive brands: Bellagio and MGM Grand." --- (MGM, press release, 2024/06/20)

"LAS VEGAS and LONDON, June 20, 2024 /CNW/ -- Playtech and MGM Resorts International (NYSE:MGM) ('MGM Resorts' or the 'Company'), are today announcing a strategic partnership which will offer new and unique live casino content to operators in the iGaming industry." --- (MGM, press release, 2024/06/20)

"LAS VEGAS and LONDON, June 20, 2024 /PRNewswire/ -- Playtech and MGM Resorts International (NYSE:MGM) ("MGM Resorts" or the "Company"), are today announcing a strategic partnership which will offer new and unique live casino content to operators in the iGaming industry." --- (MGM, press release, 2024/06/20)