F1 hotel room rates ‘sluggish’ for November race, analyst says

A gaming industry analyst whose company conducts weekly room rate surveys for Strip resorts says hotel room rates for November’s Formula One Las Vegas Grand Prix race are “stuck in neutral” compared with last year.

Barry Jonas, a gaming analyst for Atlanta-based Truist Securities, told investors in a Monday report that MGM Resorts International’s forecast for sluggish room rate growth during F1 appears to be playing out.

For the days leading up to the Nov. 23 race, room rates are tracking at an average of between $200 and $800 a night at MGM properties and $150 to $400 a night at Caesars resorts compared with $500 to $1,400 a night at MGM and $150 to $600 a night at Caesars a year ago, according to Truist research.

MGM Resorts forecasted lower room rates

The lower rates amount to a roughly $30 million decline for MGM compared with last year – a margin that could improve for the company as the race date draws closer.

“We have been surveying F1 weekend rates for seven weeks now, and rates seem to have stabilized recently with little data to suggest improvements or deterioration over that time,” Jonas said in his report.

MGM had forecast a weakening of room rates as early as late July when CEO Bill Hornbuckle told analysts in the company’s second-quarter earnings call that rates were likely to be depressed from a year ago.

But Hornbuckle said two factors could play into this year’s race: a Las Vegas Raiders home game on the weekend of Formula One and the company’s new marketing relationship with Marriott International, which has resulted in a new source of guests and revenue for MGM properties.

“I think the real issue with Formula One is it’s off to a soft start as compared to last year where we had a lot of advanced pre-bookings,” Hornbuckle said in the July 31 call. “I think you can see some of our (average daily room rates) are down. If you look at what we’re charging 50 percent, give or take.”

But he added that having the Raiders at home against the Denver Broncos on Nov. 24, the day after the race, should draw more people to the company’s south Strip properties.

“I think the good news is we have an NFL game,” Hornbuckle said. “So the south end of the Strip that only ran in the 60s last year. I think we anticipate filling that up. But the actual event itself feels soft.”

Weaker demand for Raiders tickets

Truist research also said demand hasn’t been as high for home Raiders games this year with the weakest game ticket sales occurring around Christmas holiday games — about 6 percent of tickets at Allegiant Stadium are available — and for the team’s home opener this week against the Carolina Panthers, which Jonas indicated isn’t a very compelling matchup with about 5.8 percent of tickets unsold. About 5.7 percent of the tickets remain for the game at the end of Formula One week.

Brendan Bussmann. a gaming industry analyst with Las Vegas-based B Global, said everybody knew it was going to be difficult to replicate the success of the inaugural race.

“There are other economic and calendar forces that play into rates,” Bussmann said.

“The sports and entertainment capital of the world continues to expand but coming off of two major inaugural events between Q4 2023 and Q1 2024 make the market stable but challenging to see the exponential growth you saw for those events. The market is still strong but difficult to repeat what we witnessed just a year ago.”

Jonas said “sluggish” has been a good way to describe room rates leading into fall and even though rates have been in decline, he still thinks Las Vegas is a good bet for investors. He said Jewish holidays that begin Oct. 3 could push out typical convention business and that MGM’s fortunes are harder to compare in light of the September 2023 cyberattack that crippled the company for several days last year.

While insurance recovery helped MGM recover some of the estimated $100 million in losses resulting from the attack, a room rate comparison will be skewed.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.