Rising room rates, return of conventions, and strong entertainment schedule point to strong fall in Las Vegas

Rising room rates, return of conventions, and strong entertainment schedule point to strong fall in Las Vegas

  • Buck Wargo, CDC Gaming Reports
October 3, 2021 9:45 PM
  • Buck Wargo, CDC Gaming Reports
  • Other

Some 300,000 fewer visitors came to Las Vegas in August than in July and analysts pointed to a spike in COVID-19 cases for the decline. Still, Las Vegas is poised to have a strong fall with the return of convention season this week at the Global Gaming Expo and the return of foreign travel in November.

Despite a dip to 2.99 million visitors in August from 3.3 million in July, Las Vegas showed its resiliency by exceeding gaming revenues in August 2019 when there were 3.57 million visitors. August marked the sixth consecutive month that Nevada exceeded $1 billion in gaming revenue; the Strip’s revenues were 20% higher than August 2019 even though revenue fell 21% from July.

Brendan Bussmann, casino consultant and director of global affairs for Global Market Advisors, said it appears the spike in COVID cases due to the delta variant had an impact on August visitation, though continuing pent-up demand carried gaming revenue.

Prospects are looking up going forward.

The Las Vegas Convention and Visitors Authority released a report Friday looking at the next 90 days on the convention and event calendar. It’s missing one big event; the National Association of Broadcasters, which traditionally brings 90,000 visitors, canceled its convention for Oct. 9-13t in Las Vegas, citing the pandemic and surge of the delta variant.

Besides the Vegas Golden Knights, Las Vegas Raiders, and all the concerts and shows scheduled over the next 90 days, including Lady Gaga, Céline Dion, and the Rolling Stones, the LVCVA listed the NBAA Business Aviation Convention, American Rental Association, National Hardware Show, the automotive aftermarket shows SEMA and AAPEX, and the International Council of Shopping Centers.

The LVCVA noted in its report that in August, “visitation receded from its pandemic-era peak in July.” On the other hand, August had the second highest average daily room rate of the pandemic era.

A report issued last week by Truist Securities said that while August visitation and revenue per room “were soft,” their survey results are showing room rates on the Strip are “starting to re-accelerate after bottoming a few weeks ago. We continue to monitor any impact from the Delta variant and will have more to say following the G2E trade show in Las Vegas next week.”

The initial fourth-quarter room rates for October and November are tracking up 15% from 2019, Truist said. They’re as high as 23% at Caesars Entertainment properties. When looking at just weekends, Strip rates are up 31% for October and November compared to 2019.

“Room rates accelerating is definitely a good sign,” said Josh Swissman, a casino consultant and founder of The Strategy Organization. “The operators wouldn’t be increasing room rates if there weren’t underlying volume predictions. The gaming figures give me some confidence as well.”

Visitation in the fall starts to ramp up, and the key will be the sustainability of large-scale conventions, Swissman said. G2E is the start, but the many smaller corporate meetings are important to that visitation as well, he said.

“It seems like the COVID case counts are trending in the right direction in Vegas and hopefully, that keeps people feeling safer about making a trip out,” Swissman said. “It seems, nationally, the case counts are trending in the right direction too, although it’s something that needs to be looked at.”

Also trending in the right direction is air travel through McCarran International Airport. The U.S. in November will reopen to air travelers from 33 countries, including Europe, China, and other nations, as long as they’re fully vaccinated.

“For the segment that has been non-existent at this point — the international travelers — it looks like air lift will start to return for international flights, which is critically important,” Swissman said. “We just need those international travelers and convention business to fall back into place and we’re firing on all cylinders.”

Bussman said G2E sends a sign to the convention industry that Las Vegas can hold safe meetings. G2E requires all attendees to be vaccinated to enter.

“It shows the gaming industry is back and is pushing forward, but it also shows you can have safe meetings here regardless of current conditions that are part of the government mandates,” Bussman said. “We have to get business back and thankfully we have a target to get international visitors back now.”