The Las Vegas Convention and Visitors Authority recently released its 2015 visitor profile study. This report, based on interviews with Vegas visitors, charts the behavioral and demographic shifts in the population of those who come to town. The results for this year raise more questions than they answer.
By this point, the most shopworn truism about Southern Nevada tourism is that people no longer come to Las Vegas only to gamble. It’s been 17 years since nongaming revenue first eclipsed gaming win on the Strip (see this report), but it seems that the realization is finally sinking in. LVCVA visitor profiles have charted this trend in recent years, with an increasing number of visitors not gambling at all. Yet gambling is far from dying out.
In 2014, 29 percent of visitors didn’t play at all while in town; last year that number shrank slightly to 27 percent, which is in line with the post-recession “new normal.” More people gambled in Las Vegas in 2015 than 2014, and while that number is still less than it was in 2007, it did not shrink.
Further, the percentage of visitors to Las Vegas whose primary reason for coming to gamble is only slightly lower than it was before the recession—10 percent in 2015 compared to 11 percent in 2007—and has increased from its 2011 low point. The core group of visitors drawn to Las Vegas to gamble—many of them lured by comp offers—is about the same size as it ever was. That may be why the average gambling budget among those who play is 4 percent higher in 2015 than it was in 2007: The casual players have dwindled, but the hard-core ones are just as dedicated.
Crunching the numbers a bit, you get an average nongaming trip budget of about $914 in 2015—that’s all the money spent in town, exclusive of airfare or other nonlocal transportation. That’s a 5 percent increase over 2007, the previous high point, so make it official: Visitors are spending more in Las Vegas than they ever have. With gambling up 4 percent, it is clear that we have put the recession behind us, although we have not gone back to the 2004-07 business model.
Specifically, the 2015 visitor spends less on her room and more on everything else, including gambling—if she played— than the 2007 visitor. Spending on shows (up 29 percent) and sightseeing (up 79 percent) highlight the changing nature of Las Vegas attractions: The buffet of entertainment, from big-name headliners to afternoon comedy, boosted shows, while the burgeoning popularity of the Mob Museum, Neon Museum, and Discovery Museum accounted for the near doubling of spending on sightseeing.
All dollars spent in Las Vegas, though, aren’t equal. Strip restaurants, for example, have average departmental profit margins much lower than that of the casino. Dining is no longer a loss leader, but resorts have to spend about twice as much to make a dollar from food than they do from table games, to say nothing of slot machines.
Strip resorts enjoy their highest margins on their rooms—at 63 percent, it’s nearly double the casino’s 33 percent. So rising room rates benefit resorts more than increased spending on dinner and drinks, or even gambling, since they retain a much larger share of each dollar earned. In addition, visitors paying higher room rates typically spend more on everything else, so by raising room rates, resorts may actually boost spending in other areas.
One last interesting fact: Despite a slew of well-publicized efforts to attract millennial visitors, the average age of Vegas visitors increased last year, climbing from just over 45 to nearly 48. It’s hard to tell whether this is just a statistical anomaly, but with the average age hovering in the 44-45 range for the previous three years, this jump is noteworthy. It isn’t likely to mean the end of millennial-focused marketing, since that’s where the future is, but it may signify the enduring appeal of Las Vegas to “older” visitors.
In any event, the latest visitor profile study captures an average Las Vegas visitor in transition: spending more on gambling and nongambling, just as likely to come here mostly to gamble and more likely to visit a local museum than ever. The only sure thing is that, as that visitor changes, resorts will do their best to capture their interest—and wallets.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.
