Bellagio Las Vegas Case Study (2022–2025)
- Alketa Kerxhaliu
- 1 day ago
- 31 min read
1. Property Overview
Location & Profile: The Bellagio is a flagship luxury resort-casino located at 3600 Las Vegas Blvd South in the heart of the Las Vegas Strip. It opened in 1998 and spans a 36-story tower with 3,933 guestrooms. The resort’s gross building area is approximately 2.21 million sq. ft. set on 74 acres of prime Strip frontage. Bellagio is famed for its 8-acre dancing fountain lagoon and Italianate design, anchoring it as an iconic centerpiece of the Strip’s luxury segment. Key facilities include a 157,000 sq. ft. casino floor and roughly 200,000 sq. ft. of meeting and convention space, alongside numerous high-end restaurants, retail boutiques, spa, pools, and entertainment venues (e.g. the Cirque du Soleil “O” theater).
Ownership & Brand Affiliation: Originally developed by MGM, Bellagio’s real estate is now owned by a joint venture of Blackstone Real Estate Income Trust (BREIT) and Realty Income Corp., with MGM Resorts retaining a minority 5% stake. In 2019, MGM sold Bellagio’s real estate to BREIT in a sale-leaseback, and as of 2023 BREIT holds ~73% ownership and Realty Income 21.9% (via a JV investment). MGM continues to operate the Bellagio under a long-term triple-net lease (originally ~30 years, ~26 years remaining as of late 2023). The Bellagio joined Marriott’s Luxury Collection brand affiliation in 2023 as a franchise, leveraging Marriott’s distribution while MGM manages day-to-day operations. The property underwent a major renovation in 2023, ensuring its rooms and amenities remain up-to-date in the luxury class.
Amenities: As a top-tier Luxury resort, Bellagio offers a full suite of amenities on-site. In addition to the casino and meeting facilities noted, it features multiple fine-dining restaurants, nightlife venues, high-end retail promenade, a botanical garden display, award-winning spa and salon, several pools and courtyards, and a private lake with the Bellagio Fountain show. The resort also contains a 45,000 SF ballroom (largest contiguous meeting space) and nearly 203,000 SF total meeting area for conventions. Parking is ample (~5,000 spaces) with both surface and structured garages. This blend of luxury accommodations, gaming, entertainment, and convention facilities positions Bellagio as one of Las Vegas’s most all-inclusive and upscale destinations.
Key Facts (MMCG Database): Bellagio is classified as a Luxury resort hotel and is part of Marriott’s Luxury Collection franchise. It remains open and fully operational since 1998, aside from renovations. The property’s size: 3,933 rooms / 2.207 million SF GBA, with 202,923 SF of meeting space. It is one of the largest hotels by room count in the U.S. and consistently achieves top performance in its class, as detailed in the following sections.
2. Financial Performance (2022–2024)
Bellagio’s income and expense figures from 2022 through 2024 demonstrate robust post-pandemic growth and high absolute cash flows. All data below is from the MMCG database and is on an annual calendar-year basis (ending Dec 31), reflecting the property’s actual operating performance (MGM’s operations) rather than just lease rent. Table 1 summarizes the key income and expense line items for 2022, 2023, and 2024:
Table 1 – Bellagio Income Statement Summary (2022–2024)
Income Statement (USD) | 2022 | 2023 | 2024 | % Change 2022→2024 |
Rooms Revenue | $456,099,488 | $515,089,408 | $529,008,256 | +16.0% |
Food & Beverage Revenue | $381,761,600 | $397,348,064 | $412,455,744 | +8.0% |
Other Dept. Revenue (casino, etc.) | $805,731,072 | $878,594,624 | $822,040,768 | +2.0% |
Other Income (miscellaneous) | $10,815,222 | $10,821,321 | $10,845,516 | +0.3% |
Effective Gross Income (EGI) | $1,654,407,382 | $1,801,853,417 | $1,774,350,284 | +7.3% |
Operating Expenses: | ||||
– Rooms Departmental | $107,869,800 | $115,747,408 | $133,513,704 | +23.8% |
– Food & Beverage Departmental | $282,089,856 | $305,273,952 | $313,832,000 | +11.3% |
– Other Departmental | $340,056,192 | $394,514,144 | $394,008,896 | +15.9% |
– Total Departmental Exp. | $730,015,848 | $815,535,504 | $841,354,600 | +15.2% |
– Real Estate Taxes | $20,530,982 | $21,646,684 | $23,564,016 | +14.8% |
– Property Insurance | $8,075,195 | $9,538,730 | $9,815,864 | +21.5% |
– Repairs & Maintenance (R&M) | $45,815,536 | $48,966,300 | $53,254,840 | +16.2% |
– Advertising & Marketing | $27,485,584 | $29,477,032 | $25,253,396 | –8.1% |
– Administrative & General (G&A) | $102,155,456 | $117,269,168 | $106,958,160 | +4.7% |
Total Operating Expenses | $934,078,601 | $1,042,433,358 | $1,060,200,000 | +13.5% |
Net Operating Income (NOI) | $720,328,781 | $759,419,999 | $714,149,408 | –0.9% |
– Capital Expenditures (Reserve) | $24,816,112 | $27,027,800 | $27,027,800 | +8.9% |
Net Cash Flow (NCF) | $695,512,669 | $732,392,199 | $687,121,608 | –1.2% |
Occupancy Rate | 92.0% | 94.0% | 96.0% | – |
Operating Exp. Ratio | 56.5% | 57.9% | 59.8% | – |
NOI Margin (NOI/EGI) | 43.5% | 42.1% | 40.2% | – |
Revenue Breakdown: Bellagio generates well over $1.7 billion in annual gross revenue as of 2024. Its revenue streams are diversified: in 2024, about 30% of revenue came from Rooms ($529M), 23% from Food & Beverage outlets ($412M), and the largest share 46% from “Other Departmental” revenue ($822M). Other Departmental primarily reflects the casino gaming win and other non-room, non-F&B operations (retail, entertainment, spa, etc.), with the casino being the dominant contributor given Bellagio’s scale. A small remainder (~1% of revenue, ~$10.8M) is classified as Other Income, which may include miscellaneous fees and rentals. From 2022 to 2023, total revenue jumped +9% (from $1.65B to $1.80B) driven by Las Vegas’s post-COVID demand surge – notably Rooms revenue grew +13% and gaming/other rev. +9% in 2023. Between 2023 and 2024, revenue dipped slightly (–1.5%), as record gaming volumes in 2023 normalized in 2024 (Other Dept. rev down to $822M from $879M). Still, Rooms and F&B revenues continued to climb in 2024, reflecting higher occupancy and rate, partially offsetting the gaming softness.
Expense Profile: Total operating expenses were $1.06 billion in 2024, up about +13.5% from 2022. The largest expenses are the departmental costs tied to each revenue center. In 2024 departmental expenses summed to $841M (≈79% of all operating costs), broken down as: Rooms Dept $133.5M, F&B Dept $313.8M, and Other Dept $394.0M. These are the direct costs of running each department: for example, Rooms departmental expenses include housekeeping labor, front desk staff, linen/laundry, guest supplies, etc., while F&B departmental covers food ingredients, kitchen and service staff, and outlet operating costs. Other Departmental expenses include costs for gaming operations (e.g. casino staff, gaming taxes/licensing, player complimentaries), retail and spa operations, and any other revenue centers. Notably, Bellagio’s Other Dept (casino) margin is high – $822M revenue vs. $394M expense – reflecting the profitability of gaming. Departmental expense ratios in 2024 were approximately 25% of room revenue, 76% of F&B revenue, and 48% of other revenue, yielding strong departmental profits in each area (especially gaming).
Beyond departmental costs, Bellagio incurs Undistributed Operating Expenses typical for a large hotel: Admin & General (A&G) was $107M in 2024 (covering management salaries, administrative staff, accounting, HR, IT, etc.); Advertising & Marketing was $25.3M (promotions, sales team, loyalty program, entertainment marketing); Repairs & Maintenance (Property Ops) was $53.3M (engineering staff, routine maintenance of the 2.2M SF facility and building systems); Utilities costs are not explicitly broken out in the report (likely included in other line items), but for context similar Strip resorts spend ~$2,700 per room on utilities annually on average. Fixed costs include Property Taxes of $23.56M in 2024 (up ~9% YoY) and Property Insurance of $9.8M, both of which have been rising with asset value. Notably, as a Marriott-affiliated but owner-operated property, franchise fees appear as $0 in the statements – likely because Marriott’s Luxury Collection arrangement is structured via marketing fees or is new in late 2023. There are also no Management Fees charged, since MGM self-manages the resort (as opposed to paying a third-party manager).
Profitability: Even after the hefty operating costs, Bellagio produces Net Operating Income (NOI) on the order of $700+ million annually. In 2024, NOI was $714.1M, corresponding to an NOI margin of 40.2% on $1.774B revenue. This margin, while slightly down from 42%–43% in 2022–23, is extraordinarily high for the hotel industry – a testament to Bellagio’s efficient operations and lucrative casino component. By comparison, full-service hotels on the Strip average ~20–26% gross operating profit margins and ~21% EBITDA margins, roughly half of Bellagio’s margin. After accounting for Capital Expenditures, Bellagio’s Net Cash Flow (NCF) was $687.1M in 2024. The financials assume an annual capital reserve of ~$27 million (in 2023–24) for reinvestment – equivalent to only ~1.5% of revenue. (In practice, luxury hotels often target ~5% of revenue for capital renewal; it appears Bellagio’s actual capex was lower or deferred due to its recent large renovation). Even so, post-CapEx cash flow remains very robust (NCF margin ~38.7% of revenue in 2024).
The trend from 2022 to 2024 shows peak earnings in 2023: revenue growth in 2023 (+9%) outpaced expense growth (+12%), lifting NOI to $759M. In 2024, expenses continued to rise (notably Rooms payroll and fixed costs) while revenue dipped slightly, compressing NOI by –6% vs 2023. Still, 2024 NOI is roughly on par with 2022, indicating the property has stabilized at a new high plateau of ~$700M NOI after the post-COVID boom.
Expense Categories Explained: To clarify key expense categories included above:
Departmental Expenses – Direct operating costs of revenue departments (Rooms, F&B, Casino/Other). These include labor (e.g. housekeeping, front desk, restaurant staff, dealers), cost of goods sold (food/beverage ingredients, retail merchandise), and other direct expenses of providing each service. Bellagio’s departmental expenses scale with revenues; for instance, F&B has the highest cost ratio (~76% of F&B rev in 2024) due to food costs and labor, whereas Rooms is ~25% of rooms revenue (housekeeping, laundry, guest supplies) indicating very high rooms profit flow-through. Casino operations have costs (~48% of gaming revenue) mostly from payroll, gaming taxes, and player comps, yielding ~52% departmental margin on “Other” revenues.
Admin & General (A&G) – The overhead for managing the hotel: executive management, administrative staff, accounting, human resources, IT systems, and general office expenses. At $107M in 2024, Bellagio’s G&A is about 6% of revenue.
Marketing & Sales – All promotion, advertising, sales team wages, and customer acquisition costs. Bellagio spent $25.3M (1.4% of revenue) in 2024 on Advertising & Marketing, slightly down from $29.5M in 2023 (perhaps reduced reliance on marketing after demand rebounded).
Repairs & Maintenance (Property Ops) – Cost to maintain the physical plant: engineering department payroll, routine repairs, maintenance contracts, landscaping, pool maintenance, etc. This was $53.3M in 2024 (~3% of revenue), reflecting the large scale of the facility.
Utilities – Electricity, gas, water, etc. (Though not explicitly listed in Bellagio’s 2022–24 breakdown, comparable properties spend ~$2.7K/room on utilities annually, which for Bellagio would be ~$10–$11M or ~0.6% of revenue.) It’s likely included within Other Dept or R&M expenses in this data.
Property Taxes – Real estate taxes assessed by Clark County. Bellagio’s tax was $23.56M in 2024 (about $5,990 per room, or 1.3% of revenue), increasing as the property’s assessed value rises.
Insurance – Property and casualty insurance premiums. $9.8M in 2024 (0.55% of revenue). This jumped ~22% from 2022 to 2024, reflecting insurer rate hikes.
Franchise/Management Fees – Payments to brand or third-party operator. In Bellagio’s case, $0 were recorded because MGM self-operates and the Marriott affiliation may be structured differently (any franchise fees likely netted out or started post-2024 reporting). Many hotels pay ~3%–5% of revenue as management fees, but Bellagio avoids that cost directly under its lease structure.
Capital Expenditures – Investments in long-lived assets (renovations, furniture replacement, building upgrades). These are not included in operating expenses/NOI, but are deducted to compute Net Cash Flow. Bellagio’s recurring CapEx allocation was ~$27M in both 2023 and 2024. These funds go into maintaining its 5-star facilities (e.g. room refurbishments, casino equipment, technology upgrades). Major one-time projects (like a full tower renovation) would be considered “extraordinary” CapEx; none such were noted for 2022–24 (Extraordinary CapEx = $0).
Overall, Bellagio’s financial performance in 2022–2024 shows exceptional revenue generation and solid cost control. Despite cost pressures (labor, utilities, insurance all rising), the property maintained ~40% NOI margins in 2023–24 – about double the industry norm – due to its revenue mix and economies of scale. Next, we examine these figures on a per-unit basis and relative to the asset size.
3. Operating Metrics and Key Ratios
To better contextualize performance, it’s useful to look at per-room and per-square-foot metrics, as well as financial ratios for Bellagio. Given its large scale, Bellagio’s per-room figures are strikingly high:
Revenue per Available Room: In 2024, Bellagio generated about $451,144 in total revenue per room (i.e. per key). This equates to a RevPAR (Revenue per Available Room) of roughly $369 per night (96% occupancy * ~$384 average daily rate) – far above typical U.S. luxury hotel levels. For comparison, the average full-service hotel on the Strip earned ~$126,913 revenue per room in 2023, meaning Bellagio’s revenue per key is ~3.5 times the submarket average due to its casino and premium pricing. Even on a rooms-only basis, Bellagio’s ADR (Average Daily Rate) is estimated around $380+ in 2023–24, versus the Strip’s luxury-class average ADR of $285. Occupancy has been exceptionally high (96% in 2024), so Bellagio’s RevPAR ~$365–$370 is over 50% higher than the Luxury-Upscale segment average RevPAR (~$240) on the Strip. Simply put, Bellagio is squeezing far more revenue out of each room asset than its peers, a reflection of strong pricing power and ancillary spend per guest (particularly from gaming).
Revenue per Sq. Foot: Normalizing to the building size, Bellagio’s revenue was about $803 per square foot in 2024 (using ~2.207 million SF) – a remarkably high figure for real estate. This is indicative of the intensive use of space (casino gaming areas and high-grossing F&B/retail venues contribute heavily). For context, many upscale hotels generate on the order of $300–$500 per SF in revenue; Bellagio’s number underscores its position as a high-density entertainment complex in addition to lodging.
Operating Expense per Room: Total operating expenses in 2024 equated to about $269,565 per room. This increased from ~$237,500/room in 2022 to ~$265,000 in 2023 and ~$269,600 in 2024, reflecting rising costs. The largest components per room were Other Dept expense (~$100K/room) and F&B expense (~$79.8K/room), illustrating how much resource is required to support the casino and extensive F&B operations. On a per-square-foot basis, operating expenses were roughly $480 per SF in 2024 (i.e. $1.06B expenses / 2.207M SF). Despite inflationary pressures, Bellagio’s cost structure remained efficient relative to revenue – its operating expense ratio was 59.8% in 2024 (meaning ~60 cents of every revenue dollar goes to expenses). This is up slightly from ~56–58% in 2022–23, signifying a modest margin compression. Still, a ~60% expense ratio is reasonable for a full-service casino resort (many luxury hotels run higher). The operating profit margin (Operating Income/EGI) correspondingly was ~40% in 2024, down from 42% in 2023.
NOI and NCF per Room: Bellagio’s NOI per room was a staggering $181,579 in 2024 (slightly down from $193,089 in 2023). After capital reserves, Net Cash Flow per room was $174,707 in 2024. In per-square-foot terms, NOI was about $323 per SF and NCF about $311 per SF in 2024. These figures again highlight the asset’s productivity – few hotels in the world produce $175K of cash flow per key annually.
Capital Costs per Room: The reserved capital expenditures equate to roughly $6,872 per room per year in 2023–24. This is the planned reinvestment amount (around $6.9K/key, or ~$12.25 per SF annually). While adequate for ongoing refreshes, it is on the lower side for a luxury property – likely because major renovation spending was recently completed in 2023 (and possibly funded separately). We would expect periodic spikes when rooms or casino areas undergo larger refurbishments.
Debt Service Coverage Ratios (DSCR): Given the property’s cash flow, Bellagio easily covers its debt obligations. The NOI DSCR was 6.37× in 2024 (and averaged ~6.5× over 2022–23). The NCF DSCR (after funding CapEx) was 6.13× in 2024. These ratios mean that the annual cash flow is over six times the annual debt service – an extremely comfortable cushion for lenders. In fact, at loan underwriting (late 2019), the DSCR was projected around 4.0×; the outperformance by 2022–2024 pushed coverage much higher. Such high DSCRs imply a low leverage level relative to income (estimated debt yield on NOI ~15%+). It positions Bellagio as a low-credit-risk asset; even a significant downturn would likely still leave more than enough cash flow to service debt.
Operating Ratios: Other useful ratios include the Operating Expense ratio and NOI margin (already noted: ~60% and ~40% respectively in 2024). Additionally, a Rooms departmental profit margin of ~75% (rooms expenses were 25% of rooms revenue) indicates highly efficient rooms operations – common in Vegas due to resort fees and high occupancy. The F&B margin was around 24% (F&B expense 76% of F&B rev), and Gaming/Other margin ~52%. The labor cost ratio is another key metric: in the Strip luxury segment, total labor runs ~42% of revenues on average. Bellagio’s data doesn’t explicitly break out total labor, but given high service levels and union wage increases (discussed later), labor costs are a significant component of its expenses (likely in line with that ~40–45% of revenue range).
In summary, Bellagio’s per-unit metrics underscore exceptional performance: revenue and profit per room far exceed market benchmarks, and even per square foot the asset produces very high income. Its operating ratios show strong margins, albeit with a slight decline in 2024 due to cost inflation. The next section will discuss a major transaction that valued this cash flow, and how Bellagio’s value metrics (e.g. value per key) stack up.
4. Recent Valuation and Transactions
2023 Sale to Realty Income/Blackstone: In October 2023, the Bellagio was recapitalized at an implied valuation of $5.1 billion. Blackstone’s BREIT (the owner since 2019) sold a minority stake to Realty Income Corporation, a large net-lease REIT, in a joint venture deal. The transaction details per MMCG data are: Realty Income invested $300 million in common equity for a 21.9% indirect ownership interest, and also provided $650 million in preferred equity to the venture. BREIT retained a 73.1% majority share, and MGM Resorts (the tenant-operator) kept a 5% stake in Bellagio’s real estate to align interests. The $950 million total investment by Realty Income (common + preferred) thus effectively values the property at approximately $5.1 billion in total.
This $5.1B valuation equates to roughly $1.3 million per key (for ~3,933 rooms). At the time, this was one of the highest per-room valuations ever for a hotel asset globally. It reflects not just the physical asset quality but the strength of Bellagio’s income stream. Indeed, under the sale-leaseback structure, MGM pays rent to the owners; the initial net rent in 2019 was about $245 million (implied cap rate ~5.75% on the $4.25B price) and has likely escalated modestly. The 2023 deal’s $5.1B value implies a cap rate around 5.0%–5.5% (in line with trophy net-lease assets).
Loan/Collateral Structure: The Bellagio is encumbered by a long-term triple-net lease to MGM Resorts, which serves as the primary collateral for financing. BREIT’s 2019 acquisition was financed through a combination of equity and debt, structured via a CMBS loan (commercial mortgage-backed securities) that included Bellagio as collateral. The 2019 sale-leaseback had $4.25B purchase price and was partially debt funded – the underwriting DSCR of ~4.1× suggests on the order of ~$1.5–2.0B of debt was placed (though exact loan figures are not provided, the DSCR and NCF hint at a debt service ~$110M/year). By 2023, with higher cash flows, the NCF debt coverage exceeded 6×, meaning the loan-to-value (LTV) had organically fallen and the asset was relatively under-leveraged.
As part of the Realty Income JV, no new senior loan was noted – Realty Income’s contribution was via equity/preferred equity, not additional mortgage debt. It’s likely the existing CMBS loan remained in place (BREIT may have refinanced in 2022 or kept the original loan from 2019). The presence of $650M in preferred equity (which sits above common equity but below any mortgage) indicates a layered capital stack. The collateral for lenders and preferred equity is the Bellagio real estate and its lease rent. Under the triple-net lease, MGM as tenant is responsible for property operating expenses (taxes, insurance, maintenance) in addition to rent, insulating owners from expense risk. This structure effectively turns Bellagio’s operational risk into a stable rent payment stream backed by MGM’s corporate guarantee.
From an investor viewpoint, the 2023 transaction underscores Bellagio’s value as a core real estate asset: Realty Income’s involvement (traditionally focused on steady retail/industrial rents) was notable. The deal combined a 5.1B asset value, ~$1.3M per room, with a 26-year remaining lease term and built-in rent escalators. The lease is triple-net – meaning MGM pays for all upkeep and taxes – so the owners receive a passive income. This is attractive to yield-focused investors; for example, if the rent yield was ~5.1% on $5.1B, that’s around $260M annual rent. Given Bellagio’s 2024 NOI was $714M, MGM’s rent obligation appears to be only ~36% of the property’s NOI – indicating MGM’s lease payments are well-covered by Bellagio’s operating profits (rent coverage ~2.7×). This conservative lease structure suggests MGM can sustainably pay rent even in downturns, and owners have a buffer of cash flow above rent (which MGM retains as operating profit incentive). The debt service coverage from the owner’s perspective is similarly strong – the NCF DSCR of 6.13× in 2024 implies that even after debt and CapEx, cash flow is many times the mortgage payments.
In sum, the 2023 Bellagio JV transaction reaffirmed the property’s high valuation and institutional appeal. It achieved a record price-per-key near $1.3MM, reflecting the Bellagio’s status as irreplaceable Strip real estate. The sale-leaseback structure with a top-tier operator (MGM) provides bond-like income to the owners, and the capital stack now includes common equity (BREIT 73%, Realty Income ~22%, MGM 5%), preferred equity (Realty Income $650M), and presumably an existing mortgage loan (serviceable at ~6× coverage). This complex yet robust financing structure highlights investor confidence in Bellagio’s cash flows and residual value.
5. Market Positioning Comparison
Bellagio’s operating performance can be benchmarked against the broader Las Vegas Strip luxury hotel market. In the competitive set of Luxury and Upper-Upscale hotels on the Strip (which includes major resorts like Wynn/Encore, Venetian/Palazzo, Aria, Caesars Palace, etc.), Bellagio ranks at or near the top on key metrics:
Occupancy: Bellagio’s occupancy averaged 94–96% in 2023–2024, significantly higher than the Strip’s Luxury/Upscale segment average of ~84.0% over the past 12 months. The overall Las Vegas Strip occupancy (all hotels) was 82.3%. This indicates Bellagio achieves near full capacity year-round, outperforming peers – a sign of its strong demand and loyal customer base. Even on traditionally softer midweek nights, Bellagio captures more than its share of visitors (supported by convention business and a strong brand draw). Its high occupancy also reflects MGM’s yield management that favors keeping rooms full to drive casino patronage.
Average Daily Rate (ADR): Bellagio’s room rates are among the highest in the market. Its implied ADR in 2023–24 was roughly $380–$385 (based on room revenue and occupancy) – about $100 higher than the Strip’s luxury-class average ADR (~$285). For context, the overall Strip ADR (all segments) has been around $230. Bellagio’s ability to command a ~$380 rate while also running higher occupancy is evidence of its pricing power. Only a handful of ultra-luxury Vegas properties (e.g., Wynn, Venetian’s premium suites) achieve comparable ADRs. Bellagio’s brand (now aligned with Marriott Luxury Collection), prime center-strip location, and five-star amenities allow it to consistently charge a premium relative to most competitors.
RevPAR: Revenue per available room combines rate and occupancy performance. Bellagio’s RevPAR in 2024 is estimated around $365+, which is ~53% higher than the Luxury/Upscale submarket average RevPAR ($239.75), and nearly double the overall Strip average RevPAR (~$189). This outsized RevPAR gap underscores Bellagio’s market-leading yield. Even as the broader market saw some RevPAR decline in 2024 (the Strip’s T12 RevPAR was down –6.7% YoY), Bellagio maintained very strong RevPAR via both high occupancy and rate. In practical terms, an average Bellagio room generates far more revenue than a typical Strip room, indicating superior product positioning and perhaps a more affluent customer mix.
Market Share & Mix: With 3,933 rooms, Bellagio represents about 3.3% of the Strip’s ~120,000 hotel rooms. Yet its share of the Strip’s room revenue and total revenue is substantially higher (by virtue of higher RevPAR and significant non-room revenue). Bellagio likely captures well over 5% of total visitor spending among Strip resorts, making it a key contributor in the luxury segment. The property caters to a balanced customer mix: high-end leisure travelers, casino VIPs, and group/convention attendees (its 200K SF of meeting space draws major corporate groups). This diversified demand base helps it outperform the market averages in both occupancy (benefiting from group mid-week) and ADR (premium leisure and casino comp rates on weekends).
Financial Metrics vs. Peers: In terms of per-room financials, Bellagio’s ~$451K revenue per room dwarfs the submarket; the average full-service Strip hotel in 2023 had ~$126.9K revenue/key as noted. Even focusing on just hotel revenue (rooms + F&B) excluding gaming, Bellagio is above peers: its Rooms + F&B per key was ~$239K in 2024, whereas many Strip resorts (with less F&B or no casino) would be well under $150K per key. Bellagio’s NOI margin (~40%) also likely tops most competitors – the Strip average EBITDA margin was ~20.8% in 2023. Part of this discrepancy is because many other properties have higher expense ratios or pay management fees; but a large part is Bellagio’s sheer scale and profitable gaming operations. For instance, the average Strip full-service hotel’s casino revenue is much smaller (gaming was only ~5% of total revenue on average, per “Other Departments” 5.2% in the submarket P&L) – whereas at Bellagio, the casino contributed ~46% of revenue. Thus Bellagio’s departmental profit from gaming boosts its overall margins above a typical hotel that relies mostly on rooms and F&B (which have lower margins).
Submarket Benchmarking: To illustrate, Strip Luxury & Upper-Upscale hotels collectively had an occupancy of 84.0%, ADR $285.30, and RevPAR $239.75 in the past year. Bellagio in 2024 ran ~96% occ, ADR ~$384 – so roughly 35% higher occupancy and 35% higher ADR than the class average. Even the Strip’s historical peak occupancy (~90%+ pre-pandemic) is below Bellagio’s recent levels. This suggests Bellagio loses relatively few room-nights to low demand periods, filling rooms even when other hotels see vacancies (likely by leveraging casino comps and Marriott’s network). Additionally, Bellagio’s group business (conventions) helps stabilize occupancy around the year, while its brand prestige and location keep leisure demand high.
In summary, Bellagio is positioned at the top tier of the Las Vegas market. It outperforms the broader Strip luxury segment on occupancy, ADR, and financial productivity. Its ability to do so consistently indicates strong competitive advantages – brand reputation, customer loyalty (especially among casino guests), and a prime location that commands premium rates. Investors view Bellagio as a flagship asset in a market that itself is high-performing; for instance, Las Vegas Strip hotels lead most U.S. markets in occupancy and RevPAR, and Bellagio is a leader within that context. This gives Bellagio resilience and pricing power that many hotels elsewhere (or even smaller Vegas properties) cannot match.
6. Las Vegas Strip Hospitality Market Context (2022–2025)
Bellagio’s performance has coincided with – and partly benefited from – broader trends in the Las Vegas Strip hotel market. Key market-wide indicators from 2022 through 2025 are as follows:
Recovery and Peak Demand: Las Vegas experienced a vigorous rebound after the 2020–2021 pandemic slump. Hotel demand (occupied room-nights) on the Strip jumped +18.7% in 2022 and another +8.1% in 2023, as travel roared back. Occupancy climbed from ~67% in 2021 to ~79% in 2022, then to ~86% in 2023 (approaching pre-Covid highs). This surge was fueled by leisure travelers returning en masse, a resumption of large conventions, and new mega-events that Las Vegas secured. For instance, in late 2023 Las Vegas hosted its inaugural Formula 1 Grand Prix, and in Feb 2024 it hosted the Super Bowl for the first time – events that drove unprecedented visitation and spending. The F1 Las Vegas Grand Prix alone generated an estimated $220 million in hotel revenue in its debut year. The Super Bowl 2024 set records with citywide ADRs; on the day of the game, Las Vegas ADR spiked to $843 (roughly $650 above typical) – likely one of the highest single-day ADRs ever for the market. These event tailwinds propelled the Strip’s RevPAR in early 2024 to new highs.
2024 Softening and Normalization: After the peak in early 2023–Q1 2024, the market showed signs of slight cooling. Through mid-2024 into 2025, occupancy and RevPAR growth moderated. The trailing 12-month Strip occupancy was 82.3% (down 3.7% YoY) and ADR $230.15 (down 3.1% YoY) as of mid-2025. This dip is largely a normalization from the extraordinary comparables (the prior year included the Super Bowl bump, etc., which the following year lacked). Even with those declines, the Strip’s TTM ADR of ~$230 and occupancy ~82% remain very robust by historical standards. Market participants expect RevPAR to stay slightly negative in 2025 vs the prior year, then resume moderate growth thereafter. Essentially, 2023–early 2024 formed a temporary peak due to one-off events; going forward, metrics are settling back to a sustainable growth trend. For full-year 2024, preliminary data showed demand was roughly flat (+0.7%) while supply ticked up +1.1% (due to a new resort opening), resulting in occupancy holding in the mid-80s%. ADR remained elevated but off its highs, with many Strip resorts using promotions to fill rooms during softer periods in late 2024 (especially as comparables were tough). Still, Las Vegas outperformed many U.S. markets in 2024 – the Strip’s ADR decline of –3.1% was slightly better than the –3.5% national hotel ADR drop, and occupancy decline was similar to the U.S. overall (Vegas –3.7% vs –4.5% nationally). This indicates the market held up relatively well despite losing the Super Bowl boost and facing economic headwinds (inflation, etc.).
Key Performance Metrics: To summarize recent Strip KPIs –
Occupancy: 2022 ended around ~79%; 2023 averaged ~86%; 2024 roughly 85%. The long-term norm for Strip occupancy is ~84–90% (it was ~88% in 2018–2019), so the market is in line with historical occupancy now. Weekends still often sell out (weekend occupancy >90% consistently), while midweek is boosted by conventions (~20% of Strip room nights are group demand).
ADR: Soared above pre-pandemic levels – from ~$135 in 2019 to ~$206 in 2021, up to ~$230+ in 2023. This was a deliberate strategy by operators to drive rate and profitability even if occupancy was slightly lower than the 90% peaks of the past. In 2023, ADR hit record highs (helped by high-end events and pent-up demand). As of 2025, ADR has normalized around the mid-$200s. Forecasts expect Las Vegas ADR to continue an upward trend longer-term (midterm projection ~$239 average), contingent on the city attracting marquee events and maintaining a strong convention calendar. The market is now highly event-driven: success in landing events like the Super Bowl, F1, NCAA Final Four, etc., directly translates to ADR spikes.
RevPAR: Combining the above, RevPAR on the Strip reached ~$189 in the TTM (through mid-2025). This is slightly off the peak (~$198 in early 2024), but still ~20% above 2019 levels (RevPAR in 2019 was ~$158). In 2022, RevPAR had already rebounded to ~$158 (on par with 2019), then blew past to ~$181 in 2023 and $189 in 2024. Going forward, after a mild dip in 2025, most analysts see moderate RevPAR growth resuming from 2026 onward, supported by constrained supply and continued demand growth.
Profitability: The robust RevPAR recovery translated into strong hotel profitability market-wide. For Strip full-service hotels, Gross Operating Profits reached ~26.3% of revenue in 2023, and EBITDA (after management fees, property taxes, insurance) was about 20.8% of revenue on average. These margins expanded versus 2022 (helped by high ADR). However, cost pressures are mounting: a new union labor agreement in late 2023 is raising wages significantly (from ~$26/hour in 2024 to ~$35/hour by 2029, +35%) and mandating daily room cleaning, etc.. This will increase labor expenses for all major Strip resorts (most of which are unionized) over the next few years. Already, certain expense lines like Housekeeping and other Rooms expenses rose ~16%+ in 2023 for the market. Utilities, insurance, and property taxes also saw double-digit increases. As a result, while revenue has plateaued in 2024–25, expenses keep climbing, likely squeezing profit margins somewhat. Indeed, the market’s GOP margin growth slowed in 2023 (GOP per available room was up just +2.6% in 2023 despite a 10% revenue jump). This suggests margin pressures will be a theme going forward even as RevPAR improves gradually – an important consideration for owners like Bellagio’s, who rely on steady cash flows.
Supply Changes: A critical factor in Vegas’s performance is hotel supply. Notably, the Las Vegas Strip saw a net decline in available rooms in 2024 – a rare occurrence. Two longstanding resorts were removed from inventory: the Tropicana (1,470 rooms) closed in April 2024 and was demolished by October to make way for a new MLB stadium; and The Mirage (3,044 rooms) closed in July 2024 for a full redevelopment into Hard Rock Las Vegas. These two closures total ~4,514 rooms, roughly a 4% reduction of Strip room count. This temporary contraction has tightened the market, helping bolster occupancy for remaining hotels in late 2024 and 2025. Counterbalancing this, one major new resort opened: the long-awaited Fontainebleau Las Vegas debuted in December 2023 with 3,644 rooms. Since Fontainebleau came online right before Tropicana/Mirage went offline, the net effect in 2024 was still a supply drop (Fontainebleau’s addition was outweighed by the two closures). The official data show Strip room supply fell ~0.6% in 2024 vs 2023 – an unusual but favorable dynamic for incumbent hotels.
Looking ahead, new supply is very limited in the near term. As of Q3 2025, only 284 rooms were under construction on the Strip (a small Delta by Marriott off-strip). That’s essentially negligible growth. Several big projects are in planning (e.g. Tilman Fertitta’s proposed 2,420-room luxury casino resort, and another 2,500-room resort with an arena by LVenue/NY investor group), but those are aiming for 2027+ openings. The Mirage’s rebranding to Hard Rock (with an added 600 rooms in a guitar-shaped tower) will reintroduce ~3,600 rooms in 2027. Until then, the Strip’s room count will actually be below 2019 levels due to the demolition and redevelopment projects. This supply constraint supports the market’s occupancy and pricing power in the mid-term. It’s projected that occupancy could push back toward the mid-80s by 2026–2028 as demand growth slightly outpaces the slow supply growth.
Investment Activity and Cap Rates: The Las Vegas Strip has historically been a hotbed for large hotel transactions – in the past decade, nearly ten deals exceeded $1 billion each. However, transaction activity slowed dramatically in 2024. In the 12 months up to Q3 2025, only one hotel in the Strip submarket traded hands, and its sale price was undisclosed. By contrast, the average annual sales volume for the Strip had been ~$3.2 billion (3-year avg). In 2024, only a few small properties sold (none over $30M). This represents a staggering drop in volume, reflecting higher interest rates and a bid-ask gap between sellers and buyers. The largest recent sale was actually Bellagio’s stake sale in late 2023 for $950M (discussed above) – though that was structured as a JV rather than an outright property sale. The second-largest was the 299-room SpringHill Suites Convention Center, sold for $75M ($250,836/room) in Dec 2023. Notably, that SpringHill transaction reflected a ~10.7× EBITDA multiple (roughly a 9.3% cap rate), showing that smaller limited-service assets are trading at high yields. In contrast, the Bellagio sale-leaseback valued the asset at a sub-5.5% cap rate (a much lower yield, commensurate with its trophy status and long-term lease). This dichotomy illustrates that cap rates in Las Vegas vary widely by asset quality and deal structure – prime resort casinos are viewed almost as infrastructure with low yields, whereas select-service hotels trade more on operational performance with higher yields.
Investors remain interested in Las Vegas, but 2024’s high interest rates and economic uncertainty curtailed deal-making. Market sentiment suggests the pace of hotel transactions will remain sluggish in the near term. Many owners are holding off selling unless necessary, since financing is costly and valuations have not fully adjusted downward. Some pressures could force sales – for example, owners facing expensive property improvement plan (PIP) mandates from brands, refinancing at higher rates reducing cash flow, or closed-end investment funds reaching end-of-life pushing dispositions. But absent distress, flagship assets are tightly held. The consensus is that Las Vegas will continue to see big deals, but timing will depend on capital market conditions improving. On the bright side, the fundamental performance of Strip hotels is strong, which supports valuations. For instance, even with higher cap rates generally, the market sale price per room index remains high (no fire sales observed). As of 2025, market pricing for luxury Strip hotels is still near peak levels – evidenced by the Bellagio valuation >$1M/key and other potential sales (e.g., MGM’s sale of Mirage in 2022 was over $1B, ~$330K/key for an older asset to Hard Rock).
In summary, the Las Vegas Strip hospitality market (2022–2025) has been characterized by a robust recovery to pre-pandemic volumes, record ADRs driven by events, and a recent leveling off as those boosts normalize. Supply constraints from resort closures have created a tailwind for existing hotels in 2024–2025. Profitability is strong but coming under pressure from rising costs (especially labor). The investment market has cooled significantly due to macro conditions, with trophy assets like Bellagio still commanding premium pricing while lesser assets trade at much higher cap rates if at all. For an asset like Bellagio, these market trends provide important context – they suggest the current performance is buoyed by favorable market supply-demand dynamics, but also caution that the easy gains of the rebound are giving way to a more competitive, cost-conscious environment going forward.
7. Strategic Considerations for Bellagio
Analyzing Bellagio’s financial and operational profile in light of the market context yields several strategic insights for investors and stakeholders:
Positioning & Pricing Power: Bellagio’s metrics confirm it as a market leader with considerable pricing power. Its ability to achieve near-full occupancy at rates far above the competition indicates a strong brand and loyal customer following. This suggests resilience in demand – even if the market softens, Bellagio should be among the last to feel occupancy declines, as it attracts high-end customers who may be less price-sensitive or who prioritize Bellagio’s unique offerings (e.g. fountain view rooms, renowned service). The diversified revenue base (only ~30% from rooms) further means Bellagio isn’t solely reliant on room rates; casino and F&B operations provide additional buffers. During periods of softening RevPAR in the market, Bellagio can lean on casino play or upscale promotions (e.g. events, entertainment) to sustain revenue. Its high group/convention appeal (meeting space) also helps fill rooms at good rates midweek, supporting ADR integrity. Overall, Bellagio’s premium positioning grants it strong pricing power and the ability to outperform in both good times and downturns – a critical trait for long-term investors focusing on stable, top-quartile assets.
Operational Efficiency & Scale: With ~3,933 rooms and massive ancillary operations, Bellagio benefits from economies of scale that smaller properties can’t match. Many fixed costs (management, security, etc.) are spread over a huge revenue base, contributing to its superior margins. The fact that Bellagio sustained ~40% NOI margins in 2023–24, despite industry-wide cost pressures, speaks to efficient management and perhaps opportunities to flex costs when needed. For example, marketing spend was actually reduced in 2024 without harming occupancy, implying management’s ability to optimize expenses in line with demand. The strategic partnership with Marriott’s Luxury Collection may further boost efficiency in distribution and loyalty marketing, without significant fee burden (since no franchise fees were explicitly recorded, possibly folded into other costs). Investors can view Bellagio’s high margins and DSCR as indicators of operational resilience – even if expenses rise (e.g. union wage hikes) or revenue softens, there is a substantial cushion before profitability becomes an issue. That said, going forward one should monitor how rising labor costs (estimated +~$9/hour per union employee over 5 years) will impact Bellagio. With thousands of employees, labor inflation could trim margins unless offset by revenue gains or productivity improvements. Strategic focus on efficiency (perhaps automation in certain areas, energy savings to cut utility costs, etc.) will be important to maintain margins near 40%.
Cash Flow Stability & Lease Structure: For lenders and passive investors (like Realty Income), Bellagio offers unusually stable and secure cash flow for a hotel property. The triple-net lease to MGM essentially transforms the volatile daily operations into a fixed rent obligation. From MGM’s perspective, during the strong 2022–24 period, Bellagio’s EBITDA (>$700M) far exceeded the rent (~$250–$260M), meaning the lease coverage is close to 3x – MGM is highly unlikely to default on such a profitable property. Even if a downturn occurs where Bellagio’s EBITDA drops by, say, 30%, rent would still be covered ~2x. This resilience makes the asset behave more like a bond-like investment for the owners. The DSCR of ~6x on the debt further underscores that even after meeting rent and debt service, hundreds of millions in cash flow remain (captured by MGM under the lease deal). The strategic implication is that Bellagio’s real estate has a low risk of financial distress, and it could potentially support additional debt if needed (though BREIT/Realty Income appear to have chosen a low-leverage approach, which is prudent). For hospitality professionals, Bellagio’s case exemplifies how a strong underlying operation can be leveraged into an attractive financial structure (sale-leaseback) to unlock capital while still preserving operational upside for the operator (MGM kept profit above rent and even a 5% equity stake).
Valuation & Investment Outlook: The 2023 partial sale valued Bellagio at ~$5.1B, which was at a time of rising interest rates. That such a valuation was achieved indicates investor confidence in Bellagio’s long-term prospects and the unique nature of Strip real estate. However, since then, the overall investment market has slowed; if one were to value Bellagio today, one might question if $1.3M/key is sustainable if interest rates remain high. The cap rate compression that Las Vegas enjoyed (trophy assets trading ~5%) could face upward pressure (e.g. if buyers now require 6% yields, the implied value would adjust downward unless NOI grows). On the other hand, Bellagio’s cash flows are likely to grow over time – MGM’s lease presumably has built-in escalators (often ~2% annually or CPI-based). Also, the opening of new amenities like the Sphere and upcoming events (e.g., Las Vegas will host the FIA Formula 1 annually, possibly a future Super Bowl or NCAA finals) could spur revenue spikes. Las Vegas is continually reinventing itself, which bodes well for keeping Bellagio’s performance solid. The limited new supply until 2027 is a boon – Bellagio won’t face a new comparable luxury rival for a few years (until Hard Rock Las Vegas opens on Mirage site). Even when that happens, Hard Rock will add only ~600 net new rooms (Mirage’s old count plus expansion), and Fertitta’s project (if it proceeds) would open around 2027 as well. The Strip’s demand pie is also growing with the city’s push for sports (the NFL’s Raiders, NHL’s Golden Knights, potential NBA in future). These developments suggest that Bellagio’s future cash flows have a good chance of holding up or increasing, supporting its high valuation. Strategic investors should thus view Bellagio as a relatively low-risk, income-generating asset with long-term appreciation potential, albeit with less liquidity in the near term due to the transaction slowdown.
Potential Headwinds: Despite its strengths, Bellagio is not immune to broader market headwinds. A few to note:
Softening Gaming & Consumer Spend: There were signs in 2024 of softening casino win in Nevada. If high-end gamblers pull back or if consumer discretionary spending tightens (due to economic downturn), Bellagio’s lucrative gaming revenue could be impacted. For instance, Bellagio’s 2024 “Other Dept” revenue dipped 6.4% vs 2023, hinting at some cooling after a record 2023. A continued dip in gaming or less ancillary spend per visitor (e.g. lower F&B checks) would pressure total revenue. MGM and Bellagio’s management will need to reignite casino marketing and ensure the resort remains competitive in player incentives, especially as new venues (like Wynn’s upcoming UAE resort, though not Vegas, or online gaming alternatives) vie for gambling dollars.
RevPAR Plateau/Risks: The market RevPAR is plateauing, and 2025 might see a modest decline before growth resumes. If a national recession hits, Las Vegas usually feels it (conventions cancel, leisure trips dwindle). Bellagio, for all its resilience, would see occupancy or ADR slip in a recession scenario. Given its high fixed costs (though partly passed to MGM in lease), even a 5-10 point occupancy drop could reduce annual NOI by tens of millions. Additionally, once new supply comes in 2027 (Hard Rock, etc.), there will be heightened competition in the luxury tier – potentially tempering ADR growth. Bellagio will need to continue investing in property improvements (rooms, casino tech, attractions) to stay ahead of newer properties. Its recent renovation in 2023 positions it well for now, but sustained CapEx will be crucial.
Cost Inflation and Margin Erosion: Labor cost inflation is essentially “baked in” for the next several years due to union agreements. Other expenses like insurance have also spiked (Bellagio’s insurance +21% from 2022 to 2024). If ADR growth doesn’t keep up with expense growth, NOI margins could slip further from 40% toward 35% or lower. For Bellagio’s ownership (BREIT/Realty Income), this is less of an immediate issue because their rent is fixed; it’s more of an MGM issue (since MGM bears operating cost risk under the lease). However, in an extreme case if margins compressed severely, MGM’s ability to pay rent could eventually be questioned – not likely given MGM’s scale and the profitability cushion now, but worth monitoring. Strategically, keeping costs in line (via technology, energy efficiency, etc.) will be important for MGM to continue realizing strong profits on top of rent. The fact that Bellagio’s marketing and G&A were trimmed in 2024 shows some agility in cost control, which they will need to maintain as wages and other fixed costs rise.
Reduced Investment Liquidity: From an investor’s standpoint, one headwind is the relative illiquidity of such a large asset in the current market. With transaction volume way down, if BREIT or Realty Income wanted to sell another stake or refinance, they might face fewer takers or higher yield demands. This isn’t a property-specific operational issue, but it does affect strategy – e.g., plans to monetize more of the asset or use it as collateral for new financing might be delayed until the market improves. The high interest rate environment means that if Bellagio’s owners were to refinance its debt now, the interest expense could be substantially higher, which in turn could reduce the free cash flow available (unless hedged/locked in earlier). For now, the JV structure and presumably long-term financing in place mean they can ride out the soft market. But strategists will keep an eye on the capital markets, possibly considering alternative financing (like issuing bonds secured by the MGM lease, etc.) should that be more attractive.
Long-Term Outlook: Despite near-term headwinds, the long-term fundamentals for Bellagio appear strong. Las Vegas continues to reinvent itself with new entertainment offerings (e.g. the $2B MSG Sphere opened 2023) and draws tens of millions of visitors annually. The Strip benefits from high barriers to entry (limited land and costly development, as seen by the slow pipeline). Bellagio, as a flagship resort in the center Strip, is poised to benefit from any overall market growth – more visitors, higher spending, new demand generators – while having limited new competition that could replicate its position. Its iconic status (the Bellagio fountains are arguably one of the most famous sights in Vegas) provides an enduring competitive moat. From a strategic perspective, Bellagio’s resilience lies in its diversified income, prime location, and alignment with top industry players (MGM and Marriott).
For investors and lenders, Bellagio represents a case where a hospitality asset achieves REIT-like stability (through a lease) without sacrificing the upside of operating performance (MGM captures that upside, which in turn ensures the asset is well-maintained and improved). The key strategic consideration is maintaining that delicate balance: keep the property’s luxury appeal and revenue high, manage costs, and uphold the lease obligations so that all parties – owner, operator, and lenders – continue to profit. If market trends like slightly softening RevPAR or reduced deal activity persist, Bellagio is better positioned than most to weather them, but proactive management will be needed (e.g. leveraging the Marriott partnership to attract more global high-end customers, focusing on high-margin segments like premium gaming and suites, etc.).
In conclusion, Bellagio Las Vegas stands out as a blue-chip hospitality asset. Its recent performance (2022–2024) showcases remarkable recovery and profitability, far surpassing submarket averages. The 2023 transaction validated its value, and the current market context provides both opportunities (limited supply, strong event calendar) and challenges (cost inflation, soft comps) that Bellagio is well-equipped to handle. For investors and hospitality professionals, the Bellagio case study underscores the importance of scale, diversification of revenue, and strategic financial structuring in maximizing a hotel asset’s value and resilience. With prudent management, Bellagio’s legendary fountains should continue to be matched by gushing cash flows – a reassuring sight for its owners and stakeholders in the years ahead.
September 15, 2025, by a collective authors of MMCG Invest, LLC, (retail/hospitality/multi family/sba) feasibility study consultants.
Sources: All data points are derived from the MMCG proprietary database and reports provided (financial statements and market analysis). These include verified operating statements of Bellagio (2022–2024) and CoStar hospitality submarket analytics for the Las Vegas Strip (2025). All figures and percentages cited (revenues, expenses, occupancy, ADR, RevPAR, margins, sale prices, etc.) are drawn from these sources and have been fact-checked as of the report date.