Lack of air travel, conventions hurt
Credit rating agency Fitch Ratings Service has issued a gloomy report on Las Vegas’ ability to climb out of its pandemic malaise. On Wednesday, Fitch Ratings said that Las Vegas Strip casinos will struggle through a slow recovery all the way through 2024.
Strip’s reliance on air travel, out-of-state visitors, and conventions
While its status as a gambling destination is normally a big plus for Las Vegas, it is hurting the city during the ongoing health crisis. Fitch points to the Strip’s reliance on air travel, out-of-state visitors, and conventions as the primary reasons for the expected lengthy recovery.
According to the Las Vegas Convention and Visitors Authority, just 1.5 million people visited Las Vegas in August 2020, compared to 3.3 million people in February. Three-quarters of a million people attended conventions in February, versus none in August. Mid-week hotel occupancy was 83% in February compared to only 34% in August.
Fitch analysts estimate that the Strip’s gaming revenues will be down 60% this year, 50% next year, and 20% in 2022 compared to the more than $6.5b generated in both 2018 and 2019.
Regional casinos doing better
In contrast, Fitch says that regional casinos have already rebounded fairly well. In August 2020, regional gaming revenues – aside from New York casinos – had declined just 16% compared to the same month last year. Fitch estimates a 10% decline next year when compared to 2019.
“The resilience can be ascribed to lower reliance on fly-in visitation, limited alternative entertainment options, and government stimulus supporting consumer discretionary income,” Fitch reasoned.
Essentially, regional casino patrons live closer to the casinos and often just visit for the day or overnight. Thus, the venues are not reliant on the status of the air travel industry or conventions. If you aren’t a “destination” like Las Vegas and cater more to local gamblers, the rest of the tourism industry’s problems don’t hurt as much.
Strip properties limiting operating days
The sharp downturn in Las Vegas visitation is making the Strip properties rethink their operational capacity. This week, Wynn Las Vegas announced that Encore will begin a partial-week schedule starting next Monday. The entire property – casino and hotel alike – will only be open from Thursday at 2pm until Monday at noon.
until consumer demand for Las Vegas increases”
There is no end date for the on-and-off schedule. Wynn simply said that it will go on “indefinitely until consumer demand for Las Vegas increases.”
The one part of Encore than will continue to operate is the poker room, but it will move next to door to Encore’s sister property, the Wynn.
Planet Hollywood only just reopened a week ago after closing in mid-March and has limited hotel reservations to Thursday through Sunday. The casino is open every day. Similarly, the Palazzo’s hotel tower has restricted hotel stays to the weekend while keeping the casino, shops, and restaurants open.
Experts believe that more Las Vegas properties will follow suit as they realize they are burning more money during the week than they are making because of the lack of business travelers and convention attendees.