3 Hospitality Stocks To Explore As Travel Activities Resume

May 27, 2021 07:34 PM PDT | By Kiran Murali

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3 Hospitality Stocks To Explore As Travel Activities Resume — Image source: elRoce, Shutterstock

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Summary

MGM Resorts’ revenue from China grew 9 percent in the first quarter.

Caesars Entertainment CEO sees strong demand for entertainment.

Travel restrictions in Macao, Singapore, impact Las Vegas Sands performance.

The hospitality sector took a major impact from the COVID-19 pandemic last. The businesses of hotel and resort operators plunged as travel and leisure activities dropped.

However, the increasing vaccination rate and easing of restrictions on travel and social distancing put these companies back in the limelight.

Here, we explore the stocks of three companies in the hospitality segment as the economy recovers.

MGM Resorts International (NYSE:MGM)

MGM Resorts owns 31 hotel and gaming destinations globally. Its joint venture BetMGM LLC runs sports betting and gaming activities. MGM is currently expanding in Asia with an integrated resort in Japan.

It recently secured approval from Nevada authorities to resume gaming activities without the requirement of observing covid guidelines inside its nine properties in Las Vegas Strip.

The company saw its consolidated net revenues drop 27 percent in the first quarter to US$1.6 billion as revenue from Las Vegas Strip plunged 52 percent amid lower business volume and restrictions. However, revenue from MGM China recorded a 9 percent year over year growth during the period

MGM Resorts’ stock grew 38 percent this year and has rallied 142 percent in the last one year. The stock traded in the range of US$14.65 to US$43.90 in the 52-week period.

Caesars Entertainment, Inc.

Caesars Entertainment is a Nevada-based resort and casino operator. The company operates its resorts under Caesars, Harrah's, Horseshoe and Eldorado brands.

The company has set a target of earning US$1 billion quarterly. The demand for entertainment will be “like nothing any of us have seen in our lifetimes,” said CEO Thomas R. Reeg in the company’s first quarter earnings call. COO Anthony Carano noted that the weekends in Las Vegas have been “sold out for the foreseeable future.”

The Nevada gaming authority has also approved full occupancy on Caesars Entertainment’s casino floors across all the properties in Las Vegas, without social distancing.

Caesars Entertainment’s stock, which almost tripled in the last one year, is up 45 percent year to date. The stock ended trading on Thursday at US$109.19, marking its 52-week high.

Source: Pixabay

Las Vegas Sands Corp. (NYSE:LVS)

Las Vegas Sands’ properties include the Marina Bay Sands in Singapore. The company also owns properties in Macao, including The Venetian Macao, the Plaza and Four Seasons Hotel Macao, through its subsidiary Sands China Ltd.

However, in March, the company agreed to sell the Venetian Resort Las Vegas and the Sands Expo and Convention Center in Las Vegas for approximately US$6.25 billion as it looks to focus more on Asia.

In the March quarter, Las Vegas Sands reported a 15.6 percent year-over-year decline in net revenue to US$1.20 billion. Its net loss widened to US$280 million during the period.

The company noted that travel restrictions in Macao and Singapore are impacting its financial performance.

Las Vegas Sands’ stock is down 2 percent year to date, with a 52-week trading range of US$42.58 to US$66.77. It gained around 15 percent in the last one year.

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