Strip casinos announcing layoffs, the decline in visitation and hotel occupancy, and gaming revenue down for three consecutive months continue to raise questions about what’s ahead for the rest of the year in Las Vegas.
The 6.5% decline in visitation has translated into a 1% year-over-year decline in occupancy through April, the latest month available, according to the Las Vegas Convention and Visitors Authority. Harry Reid International Airport reported passenger traffic down 3.6%, prompting concerns that consumer worries about the economy are contributing to a drop in travel.
A report last week from Barry Jonas, an analyst with Truist Securities, showed that Las Vegas room rates are trending down this summer, revealing less demand based on consumer worries.
“While the LVCVA recently cited consumer uncertainty (in their April visitation report), we’re not ready to call anything structural just yet, as we could still see improvements given shorter and shorter Vegas booking windows,” Jonas said.
LVCVA CEO Steve Hill told CDC Gaming that based on what’s happening in the marketplace, it’s wait-and-see for now. While travel in the U.S. is down, Hill said international passenger traffic to Las Vegas is up 2.7% for the year, despite concerns over a falloff from Canada.
“What’s down is domestic travelers to Las Vegas and elsewhere, generally caused by the drop in consumer confidence and concern about what might happen to the economy,” said Hill, who added he’s been buoyed by a year-over-year increase in convention attendance. “We see that the same softening extends into the summer months. We hope we can overcome that and as we get into the fall, things will start to improve.”
Others continue to express confidence.
Chad Beynon, an analyst with Macquarie Equity Research, said while there’s a decline in visitation and gaming revenue, Strip management teams are saying non-gaming revenues continue to flourish.
John Stater, a research manager at Colliers in Las Vegas who tracks the local economy, suggested that what the city is seeing is a transition in what people want from a vacation.
“The resorts have been trying to get ahead of that in terms of the amenities they provide with more experiential stuff rather than gaming,” Stater said. “We do have more coming to Las Vegas, like Universal Studios with their horror experience (this summer) that will drive more people here. The Athletics are moving to town (with construction underway on a $1.75 billion stadium). What we’re seeing more than anything else is flat visitation volume.”
While gaming revenue grew after the lockdown of the pandemic, it has since flattened. “Some of that might be people being nervous about the economy,” Stater said. “Consumer confidence is up and we’ll see that impact over the next few months. I think any issues with tourism outside of the U.S. will calm down as well. I don’t think it’s anything to worry about at the moment. We’re just not seeing the growth we would like.”
Oliver Lovat, a casino consultant and CEO of the Denstone Group, said Las Vegas is still in a good place over the long term, despite some infrastructure worries.
Demand has been strong since the pandemic, but Lovat said there are some concerns about the future with transportation leading to the city. Las Vegas needs a second airport and improved highway system from southern California. The construction of a high-speed rail between the two states will help ease that, he added.
“When all of these things happen, there will be a long sustained growth for Las Vegas,” Lovat said as long as supply expands. “It’s more expensive to build a casino resort than it’s ever been and unless you have a customer database, no matter how good your product is, it’s going to take time to ramp up and meet market expenses.”
