The focus of the Nevada gaming industry today will be whether the state shattered the all-time November revenue record of $1.32 billion, thanks to the Las Vegas Grand Prix. Looking into the future, a University of Nevada Las Vegas economics professor said the state faces a decline in gaming revenue, visitation, and hotel occupancy in 2024 if a recession hits, but is well positioned to weather it with sporting events.
Stephen Miller and the UNLV Center for Business and Economic Research release a Las Vegas and southern Nevada economic forecast at year’s end that tends to be conservative in its analysis amid the potential for a recession. Economists predicted one for 2023 with rising interest rates, but were proven wrong with strong GDP growth and a booming stock market. The rate of inflation has come down and the Federal Reserve has signaled interest-rate cuts in 2024.
The National Association for Business Economics surveyed economists, 76% of whom predicted that the chances of a recession in the next year are 50% or less. Bank of America is predicting a soft landing rather than a recession, slowing down a growth rate of 4.9% in the third quarter of 2023.
According to Miller, the Center for Business and Economic Research at UNLV isn’t predicting a recession, but Las Vegas and southern Nevada are vulnerable in the event one does take place, as some predict.
“Las Vegas remains highly specialized in the leisure and hospitality business, which suffered so much during the pandemic recession,” Miller said. “When times are good, we also tend to feel it more than others. With further professional sporting events coming to Las Vegas, there is more upside than downside in 2024. The Grand Prix and Super Bowl will likely set records in Las Vegas, helping to boost any softness we experienced in the first half of 2023.”
Las Vegas will get a snapshot today when the Nevada Gaming Control Board releases its gaming numbers for the Strip. The race was expected to boost revenue on one of the slowest weekends of the year right before Thanksgiving. The industry won’t report earnings until late January and early February, but MGM executives have already said it was a record weekend for hotel revenue and likely a record for the month.
In 2024 with the prospect of a recession, Miller forecasts that visitation, which has grown 5.8% in 2023 through October, could fall 2.3% before increasing 2.1% in 2025.
While statewide gaming revenue is up 3.3% through October, Miller said it could decline 6.1% in 2024 if a recession hits, before increasing 0.1% in 2025. Hotel occupancy, which is up 5% in Las Vegas through October, could decline 2.6% before increasing 1% in 2025.
“This year has been good, so you might have a down year after a good year,” Miller said. “Our model is good in the short run, but we could be wrong for sure. We expect a slowdown in the national economy, although our slowdown isn’t too great. The Federal Reserve is projecting 2.5% or more in 2023 and 1.5% growth next year. We’ve been calling for a soft landing, but we could have a recession if things don’t turn out right. Consumers aren’t as strong as they were, but they’re still pretty good.”
Despite these possibilities, Miller remains optimistic about the casino-industry’s prospects without a recession, though it could see a decline if there’s a slower economy as predicted by the Federal Reserve. Miller pointed out that Las Vegas has yet to reach its 2019 peak in visitation, prior to the pandemic.
“Absent a new wave of a coronavirus variant and a financial crisis leading to a recession, and assuming a resolution of the war in Ukraine and limited global reach from the Israeli-Hamas conflict, the southern Nevada economy and the local tourism sector will continue to expand somewhat in 2024 and into 2025,” Miller said. “We have several major sporting events that will help keep Las Vegas front and center for business, leisure, and international travelers.”
That includes the Super Bowl in February at Allegiant Stadium, the Raiders season in the fall, and the second-annual F1 race next November. Miller also pointed to the the opening in December of the Fontainebleau Las Vegas and Durango Casino & Resort as economic positives.
