Gulf Coast Casinos Steady Amid Macro Headwinds, Says Analyst

The Gulf Coast cassino market, which consists in the first place of Pelican State and Mississippi venues, is holding up comparatively against a thought-provoking macroeconomic backdrop.

That’s the accept of Truist Securities analyst Barry Jonas, who recently visited casinos in the Louisiana markets of Baton Rouge, La., Lake Charles, La., New Orleans and Mississippi’s Biloxi. He observed special exposure o'er the near term from less-than-ideal economic conditions.

Our takeaway is that any impact from an unfavorable macro instruction surround has been special with to the highest degree operators in the main noting body and resiliency,” wrote the analyst. “Very few properties we visited wheel spoke to any impact from macroeconomic uncertainty. The only notable softness appears to live with more value-oriented, lower-to mid-tier customers inwards select (but non all) markets.”

That’s an encouraging panorama for Gulf Coast regional operators, which include in public traded names Bally’s (NYSE: BALY), Boyd Gaming (NYSE: BYD), Caesars Entertainment (NASDAQ: CZR) and Penn Entertainment (NASDAQ: PENN).

Gulf Coast Casinos Seeing Tale of Two Consumers

With rising prices remaining cussedly high, there’s increasing headache among gambling casino operators that consumers will appear for slipway to slim down costs during their stays at gaming properties, or annihilate those visits outright.

In the Gulf Coast region, recent data show in that respect hasn’t been a vainglorious run by consumers to temporarily halt cassino visits. Still, there are some signs of pullbacks in sure demographics.

“The only if notable softness appears to be with to a greater extent value-oriented, lower-to mid-tier customers in select (but non all) markets,” added Jonas. “(But in that location is) enthusiasm o'er social security be of living increases and higher interest rates on savings flowing to discretional drop for the older demographic.”

Conversely, there’s resilience at “destination” properties inward the region, which include Harrah’s New Orleans, Golden Nugget Lake Charles, and Penn’s L’Auberge du Lac inward Lake Charles.

Those venues, which cater to larger spenders, “have not seen any blips, and nearly all properties we visited are running at 100% weekend occupancy, with weekdays comparatively solid,” according to Jonas.

Refreshed Gulf Coast Casinos Could Help

While there’s ample casino supply crosswise the Gulf Casino region, thither aren’t many young venues. Owing to tearing competition, there’s a incumbrance on operators to apportion uppercase to keeping properties inward the region novel and up-to-date.

Some are doing just now that.

For example, Boyd Gaming is revamping its Treasure Chest Casino inward the New siege of Orleans suburban area of Kenner, piece Caesars latterly transitioned the Isle inwards Lake Charles IX to its venerable Horseshoe brand. Harrah’s New Orleans is amid a $325 zillion renovation, and testament eventually have the Caesars’ name. Jonas forecasts that to each one endeavour will bring forth the issue on investiture necessary to justify the working capital spent.

“Horseshoe Lake Charles Stuart “should show a more finalized mathematical product and a clearer show of what marketplace divvy up could seem like. Management is already exploring expanding Horseshoe’s hotel (253 rooms are around half of the property’s pre-hurricane numerate and ~8% of the market). While we consider the Horseshoe is a major rise from Isle and hold no more question the prop testament receive management’s [return on investment] objectives ($50M in 2023),” concluded the analyst.

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