For all the hoopla over the Las Vegas Strip’s setting a record for gaming win in May, downtown Las Vegas has positioned itself to resume its pre-pandemic status as the fastest-growing submarket in southern Nevada.
The opening of the $1 billion Circa Resort & Casino in late October, the first on Fremont Street since 1980, coupled with other casinos’ spending tens of millions renovating their properties in recent years, is starting to pay dividends for downtown. Due to the pandemic, that didn’t happen immediately after Circa debuted and the Downtown Grand opened a 495-room tower in September.
In April, downtown recorded an all-time record of $76.3 million in gaming revenue. In May, it fell just short of that mark at $75.2 million, though that was still a significant 37% above what downtown did in May 2019 at $54.8 million. The revenue refuted any predictions that Circa would cannibalize other properties, though that might have been the case when it first opened, since downtown revenue was flat. But even those April and May marks are likely to be demolished this summer, given the increase in tourism and pent-up demand as people resume their travels after being vaccinated.
Prior to the pandemic, downtown was already on fire, reaping the benefits of capital spending and improvements to rooms, restaurants, and the Fremont Street Experience, including its light show.
Downtown gaming revenue went from $501 million in 2013 to $685 million in 2019, a 36.7% increase. In contrast, the Strip had a 1.7% increase in gaming revenues over the same seven years. North Las Vegas increased 16.7%, the Boulder Strip rose by 9.5%, and the balance of local casinos in Clark County jumped 20.6%, according to Brent Pirosch, director of gaming consulting with CBRE.
Since Las Vegas casinos reopened in June 2020 following a 2½-month shutdown, locals casinos, which don’t rely as much as the Strip and downtown on out-of-town visitors, saw gaming revenue rise by 2.7% compared to the same 12-month period ending in May 2019. By comparison, the Strip was down 29.2%.
Downtown Las Vegas, however, which counts on 20% to 25% of its business from local Las Vegans according to CBRE, saw its gaming revenue decline by only 4.7%. It’s starting to benefit more and more from Circa, whose owner Derek Stevens conducted a national marketing campaign last fall as a destination for sports bettors with its oversized sports book and poolside screens for stadium watching.
“Now, the timing is perfect, because downtown has all of this nice fresh product that competes better than it did 10 to 15 years ago as consumers are ready to come back in a big way. They’re able to capitalize on it with some smart operators leaning into strong marketing making good decisions that are paying off for them,” Pirosch said. “Downtown has all the pieces in place to make an excellent run, especially as Circa ramps up and adds to the totals, because a rising tide lifts all boats. It took a little while to ramp up, but downtown is off and running again.”
In addition to its 20%-25% locals patrons, downtown has traditionally catered to drive-in traffic from California, Arizona, and Utah seeking value and fly-in tourists from the Midwest and Hawaii, the last market segment to recover. The one casino that remains closed is Main Street Station, which typically accommodates Hawaiians, who had to abide by strict travel requirements until recently.
Adam Wiesberg, general manager of El Cortez Hotel & Casino, said downtown offers a different experience for visitors, who can walk to several properties in a short time.
“The Strip casinos are some of the greatest properties on the planet and people come here from all over the world to check them out,” Wiesberg said. “Making the pilgrimage downtown has always been popular, but it’s even more so because of properties like El Cortez, where you have this great history; we’re celebrating our 80th anniversary this year. The canopy of lights on the Fremont Street Experience has just been expanded and improved and FSE puts on free concerts. The Plaza has done a lot of great renovations and you have to give Circa a lot of the credit for downtown’s growing presence in the media. You’re talking about a billion-dollar property and the largest and arguably greatest sports book in the world.”
Wiesberg said that coming out of the pandemic, his property fared better than others along the Fremont Street Experience, because the El Cortez traditionally attracts 50% of its business from locals, while the remainder is mostly drive-in traffic from neighboring states. During the pandemic, the El Cortez hosted 70% local and drive-in customers, especially from California, and the return of fly-in tourists helps as more people want to check out a historic property, he said.
“I don’t know if this Fourth of July weekend was the busiest ever, but the hotel was very full,” Wiesberg said. “Life is Beautiful (music festival in September) is coming and Resorts World opening helps us all by having another powerhouse property on the Strip. We have NFL football in Las Vegas (with crowds for the first time) at Allegiant Stadium. We have the Convention Center expansion and along with Circa downtown, the growth potential is mind-blowing.”
El Cortez recently completed a $25 million renovation of its casino, created a high-limit room, and renovated hotel rooms and suites, Wiesberg said.
Jonathan Jossel, CEO of the Plaza Hotel & Casino that Friday celebrated its 50th anniversary, said they started seeing a pick up in April with slot and table revenue and food and beverage sales. The Plaza is capitalizing on 150 rooms it started renovating prior to the pandemic and other major renovations that date back to 2010.
Jossel said the feedback from customers is, “This isn’t the Plaza we remember from even five to six years ago.” Downtown is seeing a lot of new business and that includes the Plaza, which has been getting up to 55% of revenue in unrated play.
Any concerns that Circa would take away market share from other downtown properties were mistaken, because the shiny new property is attracting people with its amenities, Jossel said. The Plaza saw a more than 40% increase in slot revenue in April, May, and June versus 2019 and has 90%-plus occupancy on the weekends.
Jossel predicts that this fall will be the busiest and best three- to four-month period in the city’s history, even busier than now, once Canadian and international travelers return.
“Circa is one of the most significant things that has happened to us,” Jossel said. “When you hear about these record numbers, you hear mostly about pent-up demand and stimulus money. But we don’t think it’s a temporary boom. We believe this is sustainable. Not only was Main Street cleaned up and beautified, but the Greyhound bus station left. You have 800 residential units west of the Plaza on Symphony Park.”
The Plaza, whose 995 rooms are the second most of any property downtown, boasted room rates of more than $300 on July 3. That rate falls to just over $200 next weekend and $50 midweek, when occupancy will range from 40% to 60% until a return of big conventions. The Plaza’s average daily rate in June was just under $79 (not including the $28 resort fee), a value that helps attract visitors downtown.
All of downtown’s rates averaged $93.79 in May, up from $77.10 in May 2019, in part due to the addition of the high-end Circa. By comparison, in May, the Strip’s average daily rate of $132.69 was about $19 less expensive than May 2019.
“A sense of value exists downtown,” Jossel said. “People are gravitating toward that, along with the fun, excitement, and events, so we can continue being the fastest growing submarket in the state. I think we’ll be catching up with the locals (casino market gains) very soon.”
