Six straight monthly declines on Las Vegas Strip not worrying analysts

Sunday, February 2, 2025 6:51 PM
Photo:  Shutterstock
  • Buck Wargo, CDC Gaming

Six consecutive monthly year-over-year declines in gaming revenue on the Las Vegas Strip may look ominous on the surface, but analysts are sanguine about the city’s strength heading into 2025.

Despite the drop in the second half of the year, Strip revenue declined only 1% to $8.81 billion for 2024, down from a record of $8.9 billion in 2023.The last time the Strip decreased in six consecutive months was December 2018 through May 2019.

“We still think Vegas is fundamentally sound, with room rates trending up, while company commentary is positive outside of well-known tough comps,” said Truist Securities analyst Barry Jonas.

Jonas was buoyed by the ongoing growth of Las Vegas visitation, reaching 41.6 million, a 2.1% increase over 2023 and the most since the start of the pandemic, even though it remains below the 42.5 million in 2019.

Convention attendance rose to just shy of six million, the best since the pandemic, and is closing in the six-million-plus numbers posted in the years prior to the 2020 shutdown. In 2024, international air passengers rose 13.6% compared to 2023, further bolstering visitation.

There was even good news for downtown Las Vegas, which has been slow to return to pre-pandemic visitors from Hawaii. Downtown set an all-time record, going from $909.7 million in 2023 to $931.2 million in 2024, a 2.4% increase.

Jonas said the first quarter is trending positively for Strip hotel rates, despite a tough comparison with the Super Bowl a year ago. Total Strip weekend rates are trending up 6% for MGM Resorts International and 12% for Caesars Entertainment. Weekdays were up 16% and 22%, respectively.

“Our data shows rates were strong in January for both MGM and Caesars (+24%/+29%, respectively) and the overall Strip proxy up +22%, likely driven by a strong CES, which operators noted was showing booking momentum.”

Survey data suggests a softer February, with MGM and Caesars trending down 8% and 2%, respectively. Weekdays fared better than weekends.

Preliminary March data shows MGM and Caesars trending positively, up 7% and 9%, respectively.

Josh Swissman, founding partner and managing director of GMA Consulting, said even though there have been decreases over the last six months, the numbers have been small against difficult comparisons. Post-pandemic growth wasn’t sustainable.

“I said we were going to see that growth taper off, with months of flatness or slight declines, and that’s where we are right now,” Swissman said. “I’m not overly surprised. But if we start to see continuing decreases, I’ll worry a bit more. For now, we’re in a good place. The industry and Vegas are healthy. There’s certainty in the White House The market likes certainty, whether you’re a Democrat or Republican.”

Swissman said he expects some short-term headwinds from southern California, based on the wildfires displacing residents and businesses and residents focused elsewhere. There’s also the notion of “Vegas being the great escape” as people try to temporarily forget about problems and that tourism will ultimately bounce back.

“I think you’re going to see this place of settling on the Strip and in my mind, that’s not a bad thing. It just means we won’t see the meteoric growth of last year and the year before.”

Brendan Bussmann, managing partner of B Global, said whether there’s a concern or not depends on whom you talk to. Everything is cyclical and there have been some great numbers. Even though the Strip is down 1% for the year, it’s still showing strength post-pandemic.

“As I’ve said the last couple of years, we continue to face economic headwinds that in some cases we were defying and in some cases we weren’t,” Bussmann said. “I’m not overly concerned, but the economics need to change and hopefully, we’ll see some brighter days ahead, so we can lower fuel costs to help people get to Vegas.”

As for the impact late in 2024 and of the early 2025 numbers, Bussmann said it’s difficult to replicate the Strip’s first F1 race and the Super Bowl at Allegiant Stadium. He had one main suggestion going forward. “We need to focus on reinvestment in the destination, starting with our airport, so we can add more capacity.”