While inflation and fears of a recession confront the tourism market, the evidence is clear that Las Vegas is resilient, with visitation nearly back to where it was prior to the start of the pandemic in 2020.
That’s the conclusion from Brian Gordon, principal at Applied Analysis, whose report outlining the economic impact from tourism was released this week by the Las Vegas Convention and Visitors Authority.
“The latest report that recaps 2021 economic activity in the tourism industry demonstrates that travel and tourism are rebounding relatively well in southern Nevada,” Gordon said in an interview. “Las Vegas welcomed more than 30 million people last year and that included a relatively weak period in the first half. This market has continued the momentum from the prior year.”
Nevada has had 14 consecutive months of gaming revenues of $1 billion and higher and in May, Harry Reid International Airport recorded its third highest passenger total in history with 4.577 million passengers.
The LVCVA will release May visitation numbers and the Nevada Gaming Control Board will release May gaming numbers on Thursday.
“The report confirms that a significant amount of pent-up demand in the travel industry, as consumers visited Las Vegas and spent a significant amount on any number of areas, including gaming-related activities,” Gordon said. “We saw room rates at all-time high, shopping-related activity continued to escalate, and attendance at special events and entertainment offerings continued to increase.”
For the first half of 2022, many of those trends continued and the market continued to expand, Gordon said.
“We’re starting to see some of the lagging sectors of the market returning, including conventions and international travel,” Gordon said.
Harry Reid handled about a quarter-million foreign passengers in May, the most since the pandemic began. There were as few as 100,000 in February.
“Certainly, some headwinds, such as a potential recession and inflationary conditions, give us pause, but Las Vegas is relatively well positioned to capture its fair share in terms of discretionary dollars related to travel-related activities,” Gordon said. “Certainly, the current economic climate has the potential to play a bigger role going forward. With reduced travel internationally from folks within the United States, Las Vegas ranks relatively high in destinations.”
While the numbers are good, Gordon said more is possible. Travel hasn’t reached its pre-pandemic levels from either a volume standpoint or customer mix that southern Nevada has been accustomed to seeing, he said.
A story from CDC Gaming on Sunday raised concerns about reduced room rates, less visitation, and inflation-impacted spending, as outlined by Circa owner Derek Stevens.
The LVCVA report called 2021 “a year of recovery for southern Nevada’s tourism industry, following a year of staggering impacts related to the pandemic.” It noted that tourism steadily climbed through the year, with the development and widespread availability of effective vaccines and declining caseloads across the U.S. In southern Nevada, monthly visitation peaked at 3.4 million in October and monthly visitation over the second half of the year averaged 3.1 million, approaching the 3.5 million monthly average of 2019.
For the year, visitation totaled 32.2 million, a 69.4 percent increase from 2020, but 24.2 percent below the 2019 total.
Overall visitation was limited by the relative lack of convention activity and the absence of international visitors, who were subject to travel restrictions for most of the year, the report said.
Despite the decline in annual visitation, visitor spending rebounded to near pre-pandemic levels, reaching a total of $36.1 billion. The rise in aggregate visitor spending was driven by a 29.2 percent rise in per-visitor spending compared to 2019, which was largely tied to pent-up demand for travel following the pandemic, along with higher incomes and savings levels among American households, the report said.
Southern Nevada visitors shifted how they spent their money in 2021 in response to pandemic-related closures and limitations. With many entertainment venues closed or operating with limited capacities, visitor spending on entertainment fell by half compared to 2019. Similarly, many restaurant and bar options were limited early in the year, reflected in reduced spending on food and beverage, the report said.
Visitors shifted spending to other activities, most notably shopping, which increased from 18.7 percent to 25.4 percent of budgets. Gaming and sightseeing spending also increased.
Even as it continued to recover from the severe workforce cuts in 2020, southern Nevada’s tourism industry remained the largest regional employer in 2021, directly employing an estimated 189,100 workers, the report said. With direct and indirect impacts included, total employment impacts reached an estimated 290,100, which represented a 15.5 percent increase from the prior year, the report said.
Southern Nevada’s tourism industry supported $9.2 billion in direct wages in 2021, or 17 percent of all wages in the region. The additional indirect and induced impacts supported wages for workers across many sectors of the economy, with a total wage impact of $13.9 billion, or 29.3 percent of all regional wages, the report said.
Convention attendance for the year climbed to 2.2 million in 2021, while the pandemic continued to affect large group gatherings. Convention-visitor spending directly supported an estimated 13,350 jobs, $649.5 million in wages, and $2.5 billion in direct economic impact, the report said.
When the indirect and induced impacts of convention visitor spending are included, the convention sector supported an estimated 20,480 jobs, $981.9 million in wages, and $4.3 billion in overall economic output.
“The full recovery of southern Nevada’s convention and meeting segment, as well as the return of international visitors after prolonged travel restrictions during the pandemic, will be key in the continued rebound of regional visitation in the coming years,” the report concluded.