Yet, it goes without saying that the Group is confident of pocketing massive revenue and profit from the event. Formula One Group will be in Las Vegas on November 18, 2023, to host a global racing event. What is coming out as a concern is the rising inflationary cost. This includes material and labor costs, among others.
The initial estimate was that only $210 million would be spent, and the revenue would dance around $500 million. There is no shift in the revenue projection, but the spending has overrun to $400 million. This practically breaks the earning projection by more than 50%, with the fear that the price could still touch the double mark.
According to the casino news, Greg Maffei, the Chief Executive Officer of Liberty Media, has acknowledged the situation and stated that they are barely concerned with it and do not expect any change in revenue or profitability. Greg has also expressed support for the incremental capital investment that the Group is making for the event.
Having said that, one factor that boosts optimism among the community of race enthusiasts is the element of local revenue. Operators in the region are expected to earn somewhere around the prediction of the Super Bowl. The event is slated for February 2024 in Las Vegas. It brings a lot of financial benefits to the venue and the operators residing there.
For instance, hotel rooms are witnessing heavy booking demands. Most top-tier rooms have already been booked and, hence, allocated to the concerned parties. These rooms have either no refund policy or a limited refund policy. Rooms that have been left behind cost less and fall into the lower tier. Barry Jonas, an analyst from Truist Securities, has explored this portion to conclude that the fall in room rates is credited to lower-tier or economy-class hotels.
Simply put, prices are not going down, but the tier of room booking represents a different cost altogether. Jonas has also pointed out that there is a living belief that the November weekend would be the highest-grossing gaming event in the history of Las Vegas.
Gaming revenues in Las Vegas have also reported taking a hit during inflationary times. Gaming executives have come forward to speak their minds, saying that the trend has affected how people spend in casinos or even visit casinos physically. The number of visits has come down since fuel prices have increased.
Impulsive spending on gaming sites has gone down too. Las Vegas is a venue for players who look to entertain themselves over the weekend. Inflationary trends have affected every possible segment in Las Vegas; however, executives are confident of pulling off a significant win at the time of the event. Gaming executives are also convinced that the industry will bounce back to normal once interest rates are adjusted, and inflation is well within bounds.