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08/11/2021

MGM to Focus on Digital Innovation, Loyalty in Q3 2021 and Beyond

During its Q2 2021 earnings call, MGM said its loyalty programs – including BetMGM – is driving customers to visit its properties and it wants to encourage that.
Michal Christine Escobar
Senior Editor (Hotels)
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a lit up city at night with MGM Grand Las Vegas in the background

During MGM Resorts International’s Q2 2021 earnings call, President and CEO Bill Hornbuckle discussed how the company delivered an all-time record for margins in both Las Vegas and regional segments as well as all-time record EBITDA quarters at its regional properties. These records were driven by pent up consumer demand, high domestic casino spend, and the company’s ability to yield business and maintain cost discipline efforts.

Additionally, in Las Vegas, weekend volumes are “back to normal, driven by leisure and domestic casino customers with ADRs now surpassing 2019 levels,” Hornbuckle added. “The weekday while improving continued to lag the weekends in the second quarter due to lower level of group business.”

However, Hornbuckle anticipates that that full convention business recovery “will be a post '21 event, solidifying itself in the second half of 2022, and we remain pleased with how our '22 and '23 group calendar is shaping up, as well as contract commitments for the future.”

MGM’s CFP Jonathan Halkyard gave a little more color on MGM’s occupancy levels with Q2 average occupancy during the week at 77% which effectively broke down to 94% on weekends and 70% on weekdays. However, when looking at specific months, Halkyard noted that June occupancy was 83%, with weekends and weekdays at 96% and 79%, respectively while July occupancy averaged 86% for the entire month.

Labor Challenges

When asked how the company is handling the shortage of staff facing the hospitality industry at large, Hornbuckle acknowledged that the company is suffering. Like so many others in the business, the company has offered incentives to motivate people to come back to work but ultimately Hornbuckle is hoping that at the end of September, when pandemic unemployment benefits end, the company will see an increase in applications.

When questioned further on it, Hornbuckle went on to say that pre-pandemic, the company had 4,750 full time employees within its corporate enterprise.

“We’re under 3,000 today. We will never go back to 4,750 full time employees. Full stop,” he said.

According to Hornbuckle, the pandemic has really changed the way the company thinks and operates.

“There are certain things we’ll never do again, whether it’s buffet openings or how we think about labor or services or products, given what we've all gone through for the last 18 months. There's a massive amount of learnings of how to even think about our business.”

All in on Digital, Loyalty

During his opening remarks, Hornbuckle also mentioned how the company is making a real investment in digital and driving innovation along with deeper customer loyalty through technology led customer-centric experiences. In particular, the company plans to have Tilak Mandadi, its new chief strategy, innovation and technology officer, be responsible for this initiative.

Tilak is a visionary, a results-driven leader who has spent several decades of experience at both Disney and American Express, where he led similar initiatives,” Hornbuckle explained. “Tilak will also be leading our relationship with BetMGM joining its board of directors. He's another fantastic addition to our senior leadership team and complementary to the deep bench we've now built with recent additions of Jonathan as CFO, and Jyoti Chopra as our chief people, inclusion and sustainability officer. I have no doubt that will be invaluable to the company's future.”

Currently, MGM Resorts has a loyalty program with 36 million members. With the hire of Tilak Mandadi, it’s hoping to build out its technology platform and the overall design of its loyalty program to improve the portability of its rewards across properties.

“There’s a lot of work going on around that effort right now, and I’m really confident it’s going to have a real impact for us in 2022,” Halkyard said.

Already the company has seen that some of these initiatives have proven successful, added COO Corey Sanders. For instance, cross-regional for the quarter was up 25%. Additionally, the company reported that BetMGM is not cannibalizing on property customers as some suggested. In fact, the opposite is true – it seems to be driving customers to visit the physical properties.