Drive-in traffic to regional gaming markets in June slowed its growth from May, but the Las Vegas Strip kept humming with accelerated visitation and gaming revenue. That demand shows no sign of slowing in July, as Strip room rates rise, according to fresh analysis from Wall Street firms.
A report released Tuesday even highlighted one of the positive trends about the customer mix that bodes well for the entire U.S. gaming industry. Truist Securities said same-store regional-gaming revenue, excluding the Las Vegas Strip, was tracking 11% higher in May 2021 compared to May 2019 (13% when including the Strip).
“These figures and Nevada’s recent release lead us to believe the older core customer has returned, with a portion of the younger unrated player sticking around as other entertainment options return,” said Truist analyst Barry Jonas.
A report from Deutsche Bank said the Strip is edging a little closer to normal in visitation compared to 2019 and that June gaming revenues are expected to smash figures from two years ago. May set an all-time gaming win in Nevada and Clark County and marked the best-month ever for the Strip when it comes to mass-market customers (excluding VIPs).
Visitor traffic on the Strip in June fell an estimated 27% compared to June 2019, but that’s an improvement over the 38% decline in April and 32% decline in May, according to Deutsche Bank analyst Carlo Santarelli. If the spend per patron trends hold firm, Santarelli expects the Strip to “experience robust gross-gaming-revenue growth” compared to June 2019. That equates to 34.2%. It grew 24.5% in May compared to May 2019.
“That said, we would note that comparisons in June are tougher and May 2021 benefited from higher holds, thereby inflating the spend-per-patron metrics,” Santarelli said.
Deutsche Bank also noted that visitor volumes have been running much higher than its estimates. “While the Las Vegas Strip, given high-end play, is likely to show more volatility when examining visitor volumes relative to gaming spend, we believe the two-year improvement in daily traffic trends in June likely helps slot and domestic table trends,” Santarelli said.
As for future demand, JP Morgan issued a report Tuesday that shows Strip room rates for the last week of July are 12% higher than July 2019. That breaks down to 52% higher weekend rates compared to 2019, but the average is dragged down because midweek rates are 13% lower, the firm noted.
MGM Resorts International’s weekend rates were up 56%. Caesars Entertainment’s rates were up 26% on the weekend. By comparison, Wynn Resorts’ rates were up 100% on the weekend and Las Vegas Sands’ rates were up 107% on the weekend.
Las Vegas Locals/Regional Markets
In the Las Vegas locals market, traffic volumes were softer than in recent months, with June traffic down 49% compared to June 2019. It was down 42% in April and 45% in May compared to the same months in 2019, Santarelli said.
That translates to a gain in gaming revenue of 15.9% compared to June 2019, a deceleration from the 25.2% gaming revenue growth in May compared to 2019, Santarelli said.
Deutsche Bank reported there was some deceleration in traffic volume in most markets in June, but analysts still expect another strong month of spending per patron. While May showed some gaming-revenue deceleration from April in most regional markets, there were positive comparisons relative to 2019 in the majority of U.S. markets and June should be solid.
In the markets it tracked for the report, Deutsche Bank predicted gains in gaming revenue in Louisiana compared to June 2019. It added that while it’s softer for that period in Ohio, Missouri, and Indiana, “stronger spend-per-visitor metrics” in June compared to May are “likely to offset softer traffic volumes.”
Deutsche Bank estimates June gaming revenue compared to 2019 will increase 7.9% in Louisiana, but decline 4.3% in Ohio, 3.6% in Missouri, and 3.9% in Indiana.
