Las Vegas Strip Room Rates Slump in Q3, October, Signaling ‘Soft’ Market

Barry Jonas, an analyst at Truist Securities, noted that the results were “slightly worse” than in their previous published report, indicating persistent weakness. The softening of room rates occurred despite aggressive promotions from tourism officials aimed at combating the prevailing “Vegas is expensive” narrative. Truist observed that these promotions had only a “modest impact” on overall demand.

Q3: Deep Cuts in Pricing Power

Truist’s hotel room rate survey tracks forward-looking online rates across 28 Strip casinos, focusing specifically on leisure rates. The third quarter (Q3) showed pronounced weakness across all segments:

The magnitude of the declines, particularly the 17% drop in total rates for Caesars Entertainment, underscores the pricing pressure facing operators. This Q3 performance was notably weaker than earlier reports, where the combined declines for the Strip Proxy, MGM, and Caesars were $-4\%$, $-14\%$, and $-11\%$, respectively.

Weakness Continues into October Before Potential Inflection

The negative trend continued to dominate at the start of the fourth quarter. Truist’s data for October tracking showed a persistent spillover of the “summer doldrums,” which was weaker than analysts had anticipated.

• Strip Proxy rates fell by $5\%$.
• MGM rates declined by $15\%$.
• Caesars rates decreased by $12\%$.

Jonas noted that the softness was exacerbated by city-wide promotional activity intended to drive visitors back.

However, early data for November offered the first glimmer of optimism and a possible “inflection point” for the market:

• Strip Proxy rates rebounded, showing an increase of $2\%$.
• MGM rates increased by $3\%$.
• Caesars rates showed a modest increase of $1\%$.

Jonas stated this early November rebound aligns with management commentary pointing to the month as a potential turning point. Management at both Caesars and MGM expressed optimism for the fourth quarter and 2026, citing a stronger convention and event calendar. Truist predicts that if the November inflection continues into December, Caesars and MGM stocks could perform better into the first quarter of 2026.

Despite this optimism for the Strip, the broader regional gaming market also shows signs of moderation. J.P. Morgan analyst Daniel Politzer noted that while September gaming revenue growth was “decent” at $+2\%$, this growth has been buoyed by promotions that have caused operator net revenue and EBITDA growth to trail overall gaming revenue. This necessitates a “more detailed/nuanced approach” when evaluating regional operators.