Exit opportunities

The July 17 closure of The Mirage is to follow the Tropicana’s shuttering in April, bringing an end to a combined 101 years of Las Vegas history and creating a vacuum, analysts have noted, that spells great news for Strip hotel operators.

Las Vegas Boulevard will be down a total 4511 beds

With the Mirage soon to join the Trop in closing doors, analysts predict the closures will drive a spike in room rates, considering that come July 17, Las Vegas Boulevard will be down a total 4,511 beds.

Global Commercial Real Estate Services (CBRE)’s Director of Equity Research John DeCree believes the vacuum left by the shuttered rooms will ultimately translate into a rise in earnings for the operators of mid-tier Strip properties.

The Tropicana is making way for the Oakland A’s new stadium, while the Mirage’s replacement, Hard Rock Las Vegas, is only slated for opening in 2027. Analysts believe MGM Resorts and Caesars Entertainment stand the most to gain from the drastic 4.9% drop in total available beds.

Welcome outcome

DeCree’s research examined how the Mirage performed in 2023, raking in almost $596m in revenue and approximately one million occupied room nights. The research exec told the Las Vegas Review-Journal that the Mirage’s performance last year translates to “significant underlying demand for the Las Vegas Strip that will need to find a home.”

significant room inventory, particularly in the mid-tier asset class”

DeCree stated that the operators best placed “to consolidate displaced demand” were Caesars and MGM, because of “their significant room inventory, particularly in the mid-tier asset class on and around the center Strip.”

He crunched more numbers, noting MGM’s 37,243 rooms on the main resort corridor and Caesars’ 20,630 room count on and off-Strip. DeCree’s final analysis is that the Trop/Mirage vacuum could see MGM rake in an extra $69m-$102m and Caesars $31m-$49m in annualized EBITDAR.

While the Strip’s two largest operators stand most to gain, the DeCree said the room vacuum will bring “a clear benefit for all Strip operators with more customers chasing fewer rooms and ultimately driving higher (average daily rates).”

Other beneficiaries

There is, however, a limit to Caesars’ and MGMs’ additional room nights capacity during peak events, such as the Las Vegas Grand Prix.

Picking up this peak event strain for a welcome economic boost, DeCree believes, could be The Strat via a “boost from budget-minded travelers while higher-end guests will likely flock to Wynn’s two luxury properties.”

CBRE estimates The Strat could make $2.5m-$4.5m and Wynn $8.7m-$31.4m of EBITDAR from the Mirage closure.