The return of convention business and the draw of the NFL Draft has boosted midweek hotel room rates on the Strip 200% for the last week of April and 81% over that weekend. Meanwhile, a Wall Street analyst says Las Vegas could approach pre-COVID levels bookings during the third and fourth quarters of 2022.
The reports are the latest positive news for Las Vegas, a city that’s anticipating the upcoming reopening of The Palms Casino Resort and is hosting the NFL Draft April 28-30.
Compared to 2019, J.P Morgan reported midweek room rates during the last week of April are 35% higher while weekend rates are 34% higher. Overall for the second quarter of 2022, weekday rates are 90% higher than 2021 and 45% higher on the weekend. Compared to 2019, rates are 8% higher while weekend rates are 51% higher.
In February, the Las Vegas Convention and Visitors Authority reported the average daily room rate on the Strip was $159.20, up from $140.05 in 2019. The downtown rate was $89.24, up from $69.19 in 2019.
In a report released Monday, Truist Securities gave a positive outlook after hosting investor meetings with Caesars Entertainment, MGM Resorts International, Red Rock Resorts, Boyd Gaming, IGT, Everi, Light & Wonder Inc., and PlayAGS. It even mentioned the Palms reopening this spring with none concerned it will take market share.
“Operators cited a healthy Las Vegas locals market as home prices continue to rise with population growth remaining strong given Nevada state tax advantages,” said Truist analyst Barry Jonas. “With the Palms coming back online with formidable new management/ownership (with the San Manuel Band of Mission Indians), Boyd Gaming and Red Rock Resorts voiced no major concerns. They continue to see a healthy market where players will frequent the properties nearest them and the promotional environment remains mostly rational.”
The midweek room rates increase are seen as part of the rebound of conventions, the last step to a full recovery along with the return of international travel that continues to be hampered by COVID-19. J.P. Morgan reported there are four scheduled conventions the final week of April versus no conventions in the same period in 2021.
After three cancellations, the National Association of Broadcasters holds its convention from April 24th to April 27th at the Las Vegas Convention Center. It historically brings in 90,000 to 100,000 visitors.
CinemaCon2022 and the National Association of Theater Owners will meet from April 25th to April 28th at Caesars Palace. John Legend, Michael Buble and Lady Gaga are performing in Las Vegas during the busy convention week.
There’s room for continued convention growth.
Convention attendance of 439,000 in February was 41% below the 748,600 in February 2019 and that reflected itself in hotel occupancy midweek of 60.7%, down from 84.6% in February 2019. The good news is that convention attendance was a 44% improvement from the 305,300 in January when the omicron wave deterred visitation.
Overall hotel occupancy in February was 69%, below the 85.4% in February 2019. Weekend occupancy, however, was strong at 87.5%, just below the 91.9% occupancy in February 2019.
Operators noted an uptick in convention business beginning in the back half of 2022. While the booking window (both group and leisure) is narrower, the third and fourth quarters “could approach pre-COVID levels (boosted by Omicron impacted events rescheduled) with real strength coming in 2023 (aided by the Formula One racing coming to Las Vegas in November 2023),” Jonas said.
“We left incrementally positive on Vegas’s outlook post-omicron,” Jonas said. “The Strip and locals’ markets appear healthy with each month since January seeing sequential improvement. A full return of group/convention business is pending but increasingly visible. Gaming tech providers are generating strong content driving increasing demand, while the cashless gaming rollout continues.”
So far, there has been little impact from any unfavorable economic trends, Jonas said.
“With healthy post-omicron results into February and now March, pent-up demand continues to trump inflation and higher gas prices,” Jonas said. “However, we continue to be mindful of extended inflation potentially changing the outlook. Only one operator noted some impact at the lower-end of their database, but fortunately, that segment is not a focus today for any operator we cover.”
Jonas also noted that regional operators sustained sequential growth coming out of the omicron wave – some without the full return of customers 55 and older. “Operators continue to leverage their omnichannel approaches to maximizing interactive value as the online sports betting and igaming market remains fragmented and competitive.”
Many operators cited increasing spending on slots though not all quite back to pre-COVID levels, Jonas said. One manufacturer said spending in 2022 will be 85% of 2019 with a full return by 2023, despite slot machine counts on floors having compressed since COVID hit.
“There is a focus on quality over quantity and some operators are allocating more spend to premium games,” Jonas said.
Meanwhile, operators and gaming tech providers said there’s been a slow and steady rollout on cashless, in line with expectations. While some partnerships have been formed thus far (Penn National Gaming and Everi), many operators “are taking a wait-and-see approach for the product to improve – though noting the likely importance and potential inevitability of cashless,” Jonas said.
J.P. Morgan reported that for room rates for the last week of April, MGM Resorts International are up 157% midweek and 90% for the weekend. Caesars Entertainment saw rates rise 237% midweek and 89% for the weekend. Wynn Resorts saw rates increase 314% midweek and 118% for the weekend.
