KUALA LUMPUR -- Malaysia-based casino operator Genting Group on Thursday is set to open its $4.3 billion resort in global gambling mecca Las Vegas as the U.S. gets moving again after a mass inoculation campaign reduced coronavirus infections.
Resorts World Las Vegas is an integrated facility covering nearly 88 acres at the north end of the Las Vegas Strip and the first mega-resort to open there in more than a decade. Hopes are high that the project will provide a welcome boost to the desert city's entertainment-based economy hit hard by a plunge in visitor arrivals due to the spread of COVID-19.
The U.S., where some 600,000 people died as a result of the pandemic, has seen a major vaccine rollout since President Joe Biden took office in January. Daily infections have subsequently plunged and many movement and other restrictions put in place have been lifted.
Bernstein analyst Vitaly Umansky says the launch is coming at a good time, writing in a report Thursday that "the city is alive again, with leisure and gaming visitors flocking back and anticipation that the throng of conventioneers will soon follow. It is into this bullish demand resurgence that Genting's $4.3 billion gamble is opening."
The resort features 3,500 guest rooms in partnership with Hilton, a 117,000-square foot fully cashless casino with what a fact sheet describes as a "dedicated poker room and high-limit areas," as well as a theater that can seat 5,000 people. Eventually, a tunnel will ferry patrons to the nearby Las Vegas Convention Center Expansion via electric vehicles from Elon Musk's Tesla.
According to UBS Securities, visitor volumes in Las Vegas have been steadily climbing back after a slump in January, when they were down 62% from the same month in 2019 before the pandemic.
Gaming revenue on the Las Vegas Strip in January and February was 40% below levels in 2019, UBS said. But it was just 9% lower in March than two years before and by April had actually risen slightly from the same month in 2019.
"That was even before all restrictions were lifted, which only allowed 50% casino floor occupancy in April and 80% in May," UBS said in a report Wednesday.
Genting, founded in 1965 by Lim Goh Tong and now run by his second son Lim Kok Thay, has infused a few Asian elements into the resort. According to the resort's fact sheet, it contains eateries serving Shandong dumplings, Peking duck, Thai beef noodles, Taiwanese bubble tea and Japanese yakitori.
The project is not Genting's first in the U.S. It purchased the resort site in 2013 for $350 million from Boyd Gaming Corp. -- which had started building a resort there in 2007. U.S.-based Boyd, however, gave up on the project due to the global financial crisis.
Umansky considers Resorts World Las Vegas as a possible "trigger to see a rebound in development in Las Vegas," suggesting that if its proves a success the wider industry could benefit.
Some say, however, that Genting's big bet may be slow to pay off.
Tushar Mohata, an analyst at Nomura, expects revenue at Resorts World Las Vegas to come in at $350 million and $477 million in 2022 and 2023, respectively -- taking over 20 large Las Vegas Strip casinos' financials as a benchmark for the estimates. The resort's EBITDA, or earnings before interest, taxes, depreciation and amortization, is expected to be $82 million and $112 million in 2022 and 2023.
"However, the large cost of Resorts World Las Vegas and likely depreciation or interest costs means that the resort will be a drag [on] Genting's net profit in the initial post-COVID years at least," he said.