An economic forecast released Thursday by the University of Nevada Las Vegas predicts visitor volume, gaming revenue, and hotel occupancy will level out in 2023 and even post slight declines in 2024 as the nation deals with rising interest rates and a slowing economy.
The forecast by economic professor Stephen Miller, the director of research at the Center for Business and Economic Research at UNLV, came with a caveat that the Las Vegas F1 race in November 2023 and Super Bowl in February 2024 could boost his outlook.
“Absent a new wave of a coronavirus variant, another recession, and assuming a resolution of the war in Ukraine, the southern Nevada economy and the local tourism sector will continue to recover or expand the rest of 2022 and readjust somewhat in 2023 and 2024,” Miller said. “The Las Vegas Grand Prix and Super Bowl will probably set records in Las Vegas, helping to boost any softness we experience in the first half of 2023.”
Miller said visitor volume, which he expects to end the year 18.7% higher than 2021 after a 55.2% decline in 2020 when COVID hit, should decline 1.7% in 2023. He forecast a 4.5% decline in 2024.
Through September, Las Vegas has seen 28.6 million visitors, which is 10.2% below the same period in 2019 before the pandemic.
Miller predicts 2022 gaming revenue will end the year 10.9% higher than 2021 as part of its continued recovery from a 36.8% decline in 2020 when casinos were shuttered for more than two months. Gaming revenue will be flat in 2023, with Miller projecting a 0.7% decline. It will fall 1.3% in 2024, he predicts.
Led by the Strip, gaming revenue in Nevada through September has surpassed $1 billion for 19 consecutive months.
“Gross gaming revenue will likely return to pre-pandemic trends as savings and discretionary income return to where they were before COVID-19, adjusted for higher wages and inflation,” Miller said.
As for hotel occupancy, Miller said 2022 will end the year 11.3% higher than 2021 as part of a recovery when hotel occupancy fell 46.7% in 2020. He projects hotel occupancy will decline 0.3% in 2023 and 1.9% in 2024.
Miller’s models don’t fully take into account new sporting events coming to southern Nevada, such as the Las Vegas Grand Prix and Super Bowl.
“Minus an exogenous shock, such as another health crisis, both events are expected to draw record-setting crowds to Las Vegas and may lift our forecasts for 2023 and 2024 at the margin,” Miller said. “This uncertainty is somewhat reflected in our standard errors. With time comes more data and we should be in a better position of what’s to come in the spring as the short-term (of one to six months) presents more uncertainty in our models than the long-term (of seven months and higher).”
Gaming executives have been more optimistic about the Strip going forward, saying they were setting records in October to start the fourth quarter, and that bookings for the rest of the year and 2023 are strong, especially when it comes to the return of conventions and international travelers.
According to executives, inflation and high gas prices haven’t impacted spending by visitors. They’re also counting on strong visitation for the Las Vegas Grand Prix to boost the fourth quarter of 2023.
Miller said the pandemic transformed the southern Nevada economy for the worst and raised the question about how long the recovery would take. Southern Nevada faces more difficulties than most other metro areas; its reliance on sectors of the economy that require the gathering together of people proves fatal to economic activity, he said.
“The leisure and hospitality sector, the food and drinking sector, and so on place our economy at a much higher risk for negative outcomes when a pandemic buffets the economy, as we found out in the initial stages of the COVID-19 recession,” Miller said. “That being 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 likely more upside than downside in the latter part of 2023/2024.”
Miller said that with time, they’ll know more about what a world with higher interest rates looks like and “whether inflation has a long tail.” He added, “The largess of national fiscal policy and the extremely loose monetary policy instituted as policy responses to the pandemic recession boosted demand greatly and led to our current policy battle with high inflation, but low unemployment.”