Wall Street analysts have labeled Formula One’s Las Vegas Grand Prix a success, though the Las Vegas Convention and Visitors Authority’s (LVCVA) CEO says more can be done to expand the race’s benefits to include the entire community.
The inaugural Las Vegas Grand Prix continues to draw complaints from business owners who say they lost millions of dollars in revenue during several months of paving and construction leading up to the race. They are seeking reimbursement from Clark County under the threat of legal action.
Nevada generated $1.37 billion in November gaming revenue, a 12.6% increase over November 2022 and second highest in history. That’s attributed to the F1 race held the weekend before Thanksgiving, typically the slowest week of the year. Strip gaming revenue of $820.9 million was up 23% year over year and the second-highest month on record.
“Clearly, Formula One performed somewhat better than expected,” LVCVA head Steve Hill said in response to a question from CDC Gaming, his first comments since the release of gaming numbers over the holidays. “It was a spectacular event and the financial and fiscal benefits were the best we’ve ever seen. It turned November from typically a mid- to lower-level month to a record for November and one of the best months in history for the city.”
Hill acknowledged, however, that there’s room for improvement. The LVCVA reported November visitation was up slightly, 0.8%, compared to November 2022 without a race, an increase of only 27,300. That raises the question of whether visitors stayed away from Las Vegas, due to because of the disruption on and around the Strip leading up to the race and race week itself, even though ticket prices and room rates were falling.
Hotel occupancy in November rose only 0.7% year over year, while weekend occupancy fell nearly 1%. Downtown’s occupancy dropped 5.2% in November and its gaming revenue declined 2% year over year. Las Vegas room rates, however, were the highest in history at $249 on average and provided a boost to casino bottom lines.
“Occupancy wasn’t up very much. We have to get better from an event standpoint,” Hill said. “We were concerned, and our visitors were concerned, about what the environment would be around the race. That turned out to be great too. Moving around was much easier than we expected and it means people can come and get around. They don’t need to worry about that anymore. It also means we need to spread the benefits throughout the city. Downtown didn’t have the occupancy, for example, that they’re used to that weekend. That was a combination of things. One, we can do more downtown. Also, the concern that the entire city was going to suffer from the congestion didn’t turn out to be true, so we can get that message out. It’s a fantastic event and there’s a real opportunity to make it better.”
Wall Street analysts mostly praised F1 as being a boost for gaming operators. They said the gaming and record room revenue reported by operators shows it was worth bringing the race to the city and that its momentum will carry over to the Super Bowl in February.
Casino operators will report fourth-quarter earnings later this month and in February.
The expectation behind F1 included exposure to a new international market, generating a first-time customer base of affluent foreign visitors who will return even without a race.
Analysts pointed out, however, that higher-end properties, such as Wynn Resorts, benefitted more so than those on the lower tier, as evidenced by gains in baccarat revenue.
“Overall, higher-end properties with closer proximity to the track had a more robust weekend, while mid/lower-tier and further away properties saw less uplift,” said Barry Jonas, an analyst with Truist Securities. “Despite some negative press, the inaugural F1 race in November was robust for Vegas’s major players, driven by the high-end consumer. We expect F1 going forward to have wider appeal.”
Hill also pointed out that Las Vegas can expand experiences around an event like F1 in the future. The National Finals Rodeo held in December, for example, brings 500,000 people to Las Vegas over 10 days who come for the total experience.
“You can make an event citywide by adding a concert or viewing party or display,” Hill said. “Growing the event grows fans for the event itself, but also for Las Vegas.
In another tourism issue, Hill addressed drive-in traffic from California, which fell nearly 5% in November compared to a year ago and is down 3.3% for the year, while overall visitation to Las Vegas is up 5.4%, bolstered by air travel.
Congestion leaving Las Vegas on Sundays has long been an issue for southern Californians. Temporary widening has been used to alleviate the congestion as Nevada continues to push California to make much-needed freeway expansion to aid in traffic flow.
“The I-15 experience is not what we’d like for our customers,” Hill said. “We’ve been talking to California and trying to improve that. We’re all studying the effect of the lane widening for the six miles just across the border. It looked like it helped, but all it did was move the congestion down the road a little bit. We need to work with them to continue to improve I-15, because we think it’s reached capacity during those peak-demand periods. It not only hurts Las Vegas, but it hurts commerce. That’s the line from the ports to the rest of the country and hurts the communities in between. It’s a high priority for us.”
