MGM Resorts CEO Acknowledges Overpricing Mistakes: ‘Shame on Us’

^{MGM Resorts CEO Bill Hornbuckle admitted that the company overcharged guests — but it remains to be seen how and when we will see prices adjusted to a reasonable level. (Photo: Christopher Trim / Cal Sport Media)}

MGM Resorts President and CEO Bill Hornbuckle admitted during an earnings call on Wednesday that his company had made mistakes in its pricing models this summer, which led to a backlash over the high prices visitors in Las Vegas experienced at its resorts.

The admission comes after a summer in which Las Vegas saw a significant drop in visitation, with the Las Vegas Convention and Visitors Authority (LVCVA) reporting an 11% reduction in visitors year-over-year in June.

Hornbuckle: MGM Must Be ‘Sensitive’ to Customer Experience

In his comments to investors, Hornbuckle acknowledged that the company had lost touch with the needs of its customer base.

“When we think about pricing and things that got everyone’s attention, whether it’s the infamous [$26] bottle of water or Starbucks coffee at Excalibur that cost $12, shame on us,” Hornbuckle said on the call. “We should have been more sensitive to the overall experience at a place like Excalibur. To those customers, you can’t have a $29 room and a $12 coffee.”

Pricing isn’t the only issue impacting tourism to Las Vegas. International travel to the city, particularly from Canada, has seen a sharp decline following tariffs and comments from the administration of President Donald Trump. Drive-in visitors from Southern California are also down.

But even with those issues, Hornbuckle noted that pricing was a problem, and said that MGM is working to adjust some of those costs, especially at lower-end casino resorts like the Excalibur on the Las Vegas Strip.

“We lost control of the narrative over the summer,” Hornbuckle said on the earnings call. “I think we would all agree to that in hindsight. We’ve gone through the organization – we think, we hope, we believe – and we price corrected.”

Reeg: Prices Make Headlines, But Occupancy Remains Strong

Though almost everyone in Las Vegas acknowledges that pricing is an issue, not all executives think they’re causing a serious problem, even if individual incidents may make waves on social media. Caesars Entertainment CEO Tom Reeg discussed the pricing issue in an earnings call last Wednesday, commenting that their occupancy still remains high either way.

“I don’t discount that there are areas in our business and in Las Vegas that might have gotten over their skis pricing-wise,” Reeg said. "But, to put in context, you know, we’re in a quarter where while we’re talking about pricing and degradation to demand, our occupancy percentage was over 90 percent in the quarter.”

Still, those occasions where prices appear outrageous do make headlines. There was the $26 bottle of Fiji water at the Aria, or the time an international visitor reported paying $33 for a bagel and a cup of coffee at the Fontainebleau.

Stories like that have led some casino operators like Fontainebleau and Caesars Entertainment to remove extra charges like resort and parking fees for locals and resort guests. In September, the LVCVA worked with many resorts across Las Vegas, including MGM Resorts and Caesars, on a Fabulous Five-Day Sale that offered deals citywide, with operators reporting stronger than typical bookings during the event.

Overall, Reeg believes that Las Vegas still provides value to its visitors.

“When you’re pricing thousands of things every day as we are and our peers are, it’s going to be easy to find things where you say, ‘Look at how much this bottle of water costs,’” Reeg said. “But the value proposition in Vegas stacks up versus just about anywhere that you could want to travel.”