Robust Visitation Aid Boyd Gaming (BYD), High Costs Ail
Boyd Gaming (BYD) benefits from robust visitation, new property openings and refurbishment of existing properties. Boyd Gaming Corporation (BYD) is benefiting from robust visitation, new property openings, and refurbishment of existing properties in Las Vegas. Despite high costs, BYD considers the local market as a major driver for its portfolios. The company reported positive customer trends in 2023, including increased guest counts, frequency and spending, and growth in the convention business. Despite efforts to expand its portfolio, the company expects segmental EBITDAR in the Online segment to rise by 56.5% on a year-over-year basis for 2024. Additionally, the Zacks Rank #3 (Hold) company is also benefiting from strong demand for online sports betting.
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Boyd Gaming Corporation BYD continues to benefit from robust visitation, new property openings and refurbishment of existing properties. Solid contributions from its Online segment also bode well. However, high costs remain a concern.
BYD considers the local market in Las Vegas as a major driver for its portfolios. For 2023, it reported positive customer trends with respect to guest counts, frequency and spending along with growth in the convention business. During 2023, Nevada Tourism witnessed approximately 5% uptick in visitation, with Las Vegas experiencing solid growth in visitation, marking a significant rise. The convention business witnessed an impressive 20% growth in 2023.
Average daily room rates have improved by over 12% across the Southern Nevada market during 2023. With upcoming event of Las Vegas’ first Super Bowl, a bustling convention calendar, the recent introduction of Sphere, the opening of new resorts and refurbishment of existing properties and projects worth billions of dollars under development across the Las Vegas Valley, Southern Nevada is poised for sustained market growth.
Boyd Gaming continues to expand its portfolio by strengthening current operations and growing through capital investments as well as other strategic measures. The company extensively depends on acquisitions as a strategy to expand its brand presence.
During fourth-quarter 2023 earnings call, BYD stated progress regarding the significant expansion exploration of the Wilton Rancheria Tribe property. The property is currently undergoing various expansion possibilities including additional casino space, a hotel tower, and meeting and convention facilities. Although finalization has not yet been made, the company is optimistic about long-term growth potential of this property. Also, management states interest in the expansion and Gold Coast, Blue Chip, Ameristar St. Charles and Valley Forge in 2024.
The Zacks Rank #3 (Hold) company is also benefiting from robust demand for online sports betting. During 2023, adjusted EBITDAR in the Online segment was $62.3 million, reflecting 56.5% growth on a year-over-year basis. For 2024, it expects segmental EBITDAR in the range of $60-$65 million.
Management projects solid contributions from the newly introduced sports betting in Ohio in January 2023. During the second quarter of 2023, it relaunched Starts branded online casinos in Pennsylvania and New Jersey, marking the first leveraging of the Boyd Interactive platform to manage its online casino operations.
Despite several margin-enhancing initiatives, Boyd Gaming has been grappling with higher wages, utilities and property insurance expenses. During 2023, food and beverage, room, online as well as selling, general and administrative expenses increased 4.1%, 7.5%, 67.8% and 4.3% year over year to $240.9 million, $73.5 million, $359 million and $389.9 million, respectively. Total operating costs and expenses during the year were $2.84 billion, up from $2.58 billion reported in the prior-year.
Going forward, BYD intends monitoring the economic situation to gauge the impacts of interest rate hikes and inflationary pressures. Although cost pressures are likely to be moderate going through 2024, they are going to stay for some time as stated by the company.
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