After covering the Las Vegas Strip’s gaming and tourism results for July, I’m reminded of the line uttered by Jack Nicholson’s cranky, bigoted, obsessive-compulsive writer Melvin Udall in the 1997 Oscar-winning film of the same name.
“What if this is ‘As Good as it Gets?’” seems to neatly sum up 2020, the year of COVID-19.
At least one gaming analyst believes that statement might be the case.
Macquarie Securities gaming analyst Chad Beynon wrote in a research note published Monday that the Strip is seeing some improvement in demand from leisure travelers.
But the numbers are not nearing 2019 levels, especially following Nevada’s 78-day gaming industry shutdown.
Strip hotel occupancy is running in the mid-50% range on weekends and around 35% on weekdays. McCarran International Airport’s passenger volume is down 55.3%, including a 68.3% decline in international travel.
There isn’t any convention and event business on the books stretching into the early part of 2021. In fact, the Las Vegas Convention and Visitors Authority said July marked the fourth straight month with zero convention attendees.
Beynon said it might be three years before the Strip matches its 2019 business of $6.857 billion in gaming revenues, 42.5 million visitors, and 6.65 million convention attendees.
“We believe with a (COVID-19) vaccine, the Las Vegas market will see a quick recovery and our bull case scenario points to 2023 being the break-even year,” Beynon said.
The Las Vegas Strip during the casino shutdowns in April
Through July, the Las Vegas Strip’s total gaming revenues are down 47.9% compared to the first seven months of 2019. Still, analysts found a positive in the results.
Combined, January and February produced almost $1.2 billion in gaming revenue on the Strip, putting the market at almost 4% above 2019’s two-month figures.
The spreading coronavirus pandemic forced the casino closures on March 18 and sent April and May’s results to largely 99% declines.
With the reopened resorts operating under COVID-19 health, safety, and cleaning guidelines; social distancing and capacity protocols; restrictions on live entertainment; and with a lack of air travel, Las Vegas has become a drive-in gaming destination.
According to the LVCVA, the average daily auto traffic into Las Vegas through all major highways was an estimated 122,299 vehicles in July, down 9.9% from a year ago but 14% higher than the first two months of this year. Average daily auto traffic at the California-Nevada border on Interstate 15 was 44,332 vehicles in July, a 13% increase above 2019’s first two months.
Last Sunday, traffic was backed up for 10 miles on the way out of Las Vegas to California along I-15, according to a tweet from Southern Nevada’s Regional Transportation Commission. The agency provided a photo showing the backup on the border town of Primm.
At least visitors seem to be gambling.
Beynon is forecasting Strip revenues to fall roughly 45%-to-60% in the second half of 2020, based on all the indicators.
“With weekend occupancies already near 50%, we believe trends are running ahead of analyst projections,” he said. “This is also without any conventions or events.”
Traffic heading toward Southern California backed up at Primm, Nevada on Sunday August 30/Photo via Twitter
There are unique marketing angles, such as MGM Resorts International’s “Viva Las Office” at Bellagio and Aria, which is targeting the work-from-home crowd with “the ultimate home-away-from-the-home office experience.”
The Las Vegas Strip remains, however, a market that is hard to predict.
That’s why LVCVA spokeswoman Lori Nelson-Kraft said the agency is not providing its traditional holiday weekend economic impact and visitation estimates for Labor Day. Coronavirus, she said, causes conditions “to be fluid from one week to the next,” making any forecasting a difficult and murky process.
In the past few years, Las Vegas resort operators added more 1.73 million square feet of convention and meeting space, including the 550,000-square-foot Caesars Forum Convention Center, which had been scheduled to host the canceled NFL Draft in April. At the end of 2019, Las Vegas had approximately 11.9 million square feet of meeting and convention facilities.
It all sits empty as long as COVID-19 hovers above the industry.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
