How The Pandemic Changed Vegas And What Lies Ahead For The Tourism Mecca

Posted on November 19, 2020

The global coronavirus pandemic has affected business in Las Vegas differently than most cities in the US. Yes, this virus is affecting businesses all over the world but the impact isn’t the same everywhere.

Cities that largely depend on international tourism and business travel like Las Vegas will feel the pain today and for at least the next couple of years. Las Vegas is in a unique position from other US casino markets. This is what makes Las Vegas special but it’s also making recovery a bit slower.

Regional casinos already on the mend

Regional casino operators like Boyd Gaming are already bouncing back from closures earlier this year. This is the case with various casino operators that depend on residents within driving distance.

Even Las Vegas casinos that depend on local residents are beginning to come back from being closed earlier this year and the current social spacing rules. These types of casinos in Las Vegas and around the country are seeing fewer guests but they’re spending more money per visit.

Station Casinos and some Boyd Gaming properties fall into this category in Las Vegas. Penn National Gaming properties is another regional casino operator with properties around the country.

Many of these properties are institutions of the community. They’re more than just a place to gamble. These properties are local bars, restaurants, bowling alleys, and more. They may not offer lavish production shows or world-famous celebrity chefs but they offer a comfortable place for adults and families to spend time.

A slow return for Las Vegas

The casinos on the Vegas Strip are having a more difficult time recovering. According to multiple gaming industry analysts, it will take multiple years before the Vegas Strip is back to what people remember.

In the “Las Vegas: A Post-COVID Landscape” research paper, UNLV provost and historian David G. Schwartz said the following:

“Las Vegas is facing a historic crisis, and its response over the next few months will determine the trajectory of the city for years, if not decades.”

Even the Nevada Economic Forum is finding it difficult to pinpoint how and when Las Vegas will return to pre-coronavirus levels.

During the early November meeting, Moody’s Analytics shared data that shows a slow return for the US that will extend into 2022. Further, Las Vegas won’t be able to recover until airlines recover.

According to the most recent Las Vegas Convention and Visitors Authority (LVCVA) annual Visitor Profile, about half of the visitors to Las Vegas travel via airplane. More than 42 million visited Las Vegas in 2019.

Approximately 21 million visitors flew to Las Vegas in 2019. Until the world is comfortable flying again and all borders are open, Las Vegas won’t see a return to pre-coronavirus levels.

Why the Vegas Strip is different

In recent years, Vegas Strip casinos have put a focus on two different segments. The goal has been to have customers filling hotel rooms and restaurants for all seven days during the week.

During weekdays business travelers would visit for conventions, conferences and meetings. During the weekend the casino corporations used entertainment to draw leisure travelers for entertainment in showrooms, theaters and arenas.

The tactic was working as hotel rooms on the Vegas Strip were filled throughout the week, resulting in a revenue boon. However, social distancing and capacity limits have put an end to the big shows and conferences in Las Vegas this year. What’s open in Las Vegas and the capacity numbers ebb and flow with virus case counts.

Large-scale arena and theater events don’t seem as though they’ll return anytime soon. Caesars and MGM Resorts are starting to bring back small scale entertainment. However, shows can only have 250 people at the maximum. This is a far cry from thousands that would typically see a large show or residency. Obviously, revenue from entertainment will be limited until the coronavirus slows down greatly.

Conventions are allowed limited to open for a limited audience which could increase in 2021. However, the largest convention of the year in Las Vegas, the Consumer Electronics Show, won’t return until 2022 at the earliest. The largest convention and expo of the year in Las Vegas had more than 175,000 attendees in 2019, so losing it is a big blow to the city.

The large crowd for a four-day event is just part of the equation for Las Vegas. Hotel rooms around town are close to capacity for the entire week. Not coincidentally, this week typically has close to the highest hotel room rates each year.

Las Vegas is more than just gaming

There are casinos all over the US that offer the ability to gamble. Las Vegas is different as the properties offer much more than a room to play slots or table games. Former MGM Resorts International CEO Jim Murren might have said it best with a simple statement:

“…without live entertainment, without conventions, Las Vegas is just another hotel town.”

In 2019, Vegas Strip casinos made approximately two-thirds of revenue from non-gaming parts of the casino. Neary 65% of revenue for Vegas Strip casinos came from hotel rooms, food, beverage, etc. In other words, only about 35% of revenue on the Vegas Strip came from gambling. This ain’t yo grandpa’s Las Vegas.

The revenue split isn’t quite as drastic when you leave the Vegas Strip. Downtown Las Vegas and casinos throughout Nevada see closer to 50% of revenue from gaming. The reason for this is twofold.

First, these casinos have different customers than international tourists and business travelers on the Vegas Strip. Second, casinos away from the Vegas Strip don’t offer the same lavish amenities – including bars and restaurants. The local bar and restaurant can’t quite charge the same as a tourist trap.

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Post-COVID recovery and looking forward

Regional visitors continue to return to Las Vegas. The drive from California and Arizona is still comfortable for those looking for a change of scenery. According to the LVCVA, 10% more people drove to Las Vegas in September than the previous month. Similarly, more people drove to Las Vegas in September than in July.

However, it will take some time for visitors to fly to Las Vegas. If a vaccine is a cure-all many expect this will take some time to get out. According to the Center for Disease Control (CDC), will take months for a vaccine to reach the general population in the US and around the world. The CDC says adults should be able to receive a vaccine in late 2021.

Even if things go smoothly it will take time for the vaccine to reach every adult all over the world. Similarly, recipients will still have to return to traveling the way they used to. There’s no guarantee if and when that will happen.

In the meantime, casinos in Las Vegas (and the rest of the country) are already changing. Visiting Las Vegas won’t be the same today and a year or two from now.

Coronavirus is pushing casinos to expedite some efforts to cut expenses and move up targets to launch new automation and digital efforts.

For example, in an effort to reduce contact and close communication with others, the many properties have sped up contactless and mobile efforts. Guests are encouraged to check into the hotels via mobile devices or kiosks. Digital keys on mobile phones mean guests don’t even need a physical key.

Gaming will also be different. Vegas Strip casinos are offering more electronic gaming options. There are more gaming units for blackjack, craps, baccarat, roulette, etc. These gaming units are easier to clean than traditional table games. Additionally, no dealer means fewer possible germs in the air.

Las Vegas casino operators are also streamlining expenses. Buffets that became synonymous with Las Vegas may not return. These eateries aren’t very profitable and casinos can’t bring back venues that aren’t generating positive cash flow.

Similarly, casinos have laid off many employees due to coronavirus. Many may never return as casinos learn to operate on a smaller staff. All of this will make the future different in Las Vegas.

Las Vegas casinos are already changing. This transformation will continue as Sin City tries to reinvent itself once again.

Photo by John Locher / Associated Press
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Marc Meltzer

Marc grew up on the mean streets of the South Bronx. He's the rare combination of Yankees and Jets fan which explains his often contrarian point of view. Marc is a freelance writer and social media consultant. Writing about steak, booze, gambling and Las Vegas is a tough job but somebody has to do it.

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