MGM Resorts CEO Bill Hornbuckle On Hiring Post-Pandemic And His Asset-Light Strategy Moving Forward
While every industry was impacted by the coronavirus pandemic, the hospitality and entertainment sectors may have faced some of the greatest challenges. Hotel vacancies soared, restaurant reservations dried up, and scores of concerts and sporting events were canceled. Amid all this, one massive hospitality company that should have taken the hardest hits was able to steer through the storm and come back with a strong plan for the future.
MGM Resorts International saw activity at its hotels and gambling tables dwindle as a result of the pandemic, but now things are back on track. Just this week, Forbes reported that shares of MGM Resorts have gained 2.4% in the past month as opposed to a decline seen by Las Vegas Sands and Wynn Resorts. Add this to the company’s growing digital gaming enterprise, and there is no telling what is in store for MGM.
On this week’s Walker Webcast, Walker & Dunlop CEO Willy Walker broadcast his Sept. 9 conversation with Bill Hornbuckle, CEO and president at MGM Resorts International. During the talk, Hornbuckle detailed some of the key challenges that have sprung up for him over the past few months, the real estate strategy he has put in place for the future of MGM and how the company is doing its part to save the planet.
Walker said that one thing that has impressed him about Hornbuckle is how he acknowledges and respects his employees. When Hornbuckle was first named CEO of MGM, the first thing he did was talk about how great the employees were, and in the last company earnings call, instead of focusing on the company’s gangbusters earnings, he talked about the importance of his staff.
“As much as we help provide the environment, we, meaning senior management, don't provide the experience,” Hornbuckle said. “And so, the folks in this room are the folks who do that every day and have direct contact with our guests. We need a great deal of respect for them. I think our organization has thrived on it and I want to do more of it.”
Walker asked if Hornbuckle has experienced an uptick in hiring since the federal supplementary benefits expired. He said he hasn’t and that many of the people he has spoken to in the Las Vegas community seem to be waiting till the last minute to fill a new position. Hornbuckle said that there is no urgency to finding a position in the area, since there are thousands of jobs available, and the work isn't easy, particularly when it often requires telling people to put on a mask.
Walker pivoted to asking Hornbuckle about the ways MGM is working to make the world a greener place. He brought up the fact that the population of Las Vegas has doubled since 2002, but the city is using less water than it did back then. Since MGM employs thousands of Vegas residents and has such a large real estate footprint in the area, Walker said it must be playing a role in that reduction.
Hornbuckle said that despite the resort community taking up 3 square miles of Las Vegas, they only account for 5% to 6% of total water usage in the area, and most of the water they use ends up recycled back into Lake Mead. On top of that, in June, the company launched the largest single solar array used by an independent hospitality company in the world — 675 acres of solar power.
“We take it seriously because a decade from now, if we can't get people to live here and move here, we're going to have a problem,” Hornbuckle said.
MGM isn’t limited to just Las Vegas, however, and Walker asked Hornbuckle about the company’s national and international strategy. He said that while it does have locations in Michigan, Mississippi, Maryland, Massachusetts and New Jersey, the rise of online betting has limited the company’s need to grow geographically, at least in the U.S. Now the company’s focus is on growing in Macao, Japan and digitally. MGM already has BetMGM, its online sports betting tool, in 14 states and will have it in 21 soon. Hornbuckle said he believes online betting is slated to be a $30B business.
Hornbuckle said that the company is adopting an asset-light strategy as part of its plans for the next few years. The company recently did two major real estate deals with Blackstone and VC partners in an effort to make the move from being a property owner and operator to primarily a property operator. He said that MGM has had way too much money tied up in core real estate, and by making these deals, his team can focus on operations, which is what they do best, but they are still exercising as much control as possible over the property.
“We’re triple net lease, so if I don’t like the condition of the carpet, I don’t have to talk to an owner — I am the owner of that carpet, so I can replace it,” Hornbuckle said.
This move is estimated to leave the company with $11B in cash, he said, adding that this has left him with a lot of questions that need to be answered about MGM’s future.
“The gaming industry is a highly regulated business,” Hornbuckle said. “And so, where else can we go? What else should we be doing? How do we stay true to our shareholders?”
On Sept. 29, Walker will host R.E.M. manager Bertis Downs and founding member Mike Mills. Register here for the event.
This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content.
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