According to initial plans released by several casino companies, roughly 41% of the total Las Vegas Strip hotel room capacity will, tentatively, reopen on June 4.
One analyst, however, said the percentage of rooms available will likely be much lower, given health and safety guidelines put into place by resort operators and state gaming regulators.
“At this stage, we think it is likely an overestimation of capacity, as we believe there to be a reasonable chance that (hotel) floors and towers remain dark in the early stages,” Deutsche Bank gaming analyst Carlo Santarelli said in a research note to investors on Friday morning.
By Friday afternoon, Nevada Governor Steve Sisolak had announced the planned June 4 reopening date for the state’s casino industry, which has been closed since March 18 in an effort to slow the spreading coronavirus pandemic.
The Gaming Control Board will hold a workshop hearing Tuesday morning with a number of health and safety experts involved in managing Nevada’s response to COVID-19, including the state’s director, hospital officials from Reno and Las Vegas, and several first responder representatives.
Message on the Caesars Palace marquee on May 15/ Photo by Howard Stutz
Sisolak will hold a press conference at 5:30 p.m. after the regulators meet to discuss moving to the second phase of the state’s economic reopening. Phase 1 began on May 9.
The reopening of Nevada’s casino market, the nation’s largest, which produced $12 billion in gaming revenue in 2019 and is home to some of the industry’s most iconic properties along the Las Vegas Strip, would mark a milestone in the gaming industry’s post-pandemic recovery.
More than 1,000 commercial and tribal casinos in 43 states closed in March. In the past two weeks, roughly 160 gaming properties have reopened in 15 states.
Airline travel in and out of Las Vegas fell by 53% in March and response to the pandemic has been different in every state, forcing casino operators to take a slow approach. Santarelli expects that the bulk of the business for Las Vegas will be drive-in from Southern California and Arizona.
What properties are opening?
Caesars Entertainment said last week it would initially reopen Caesars Palace and the Flamingo Las Vegas, along with the High Roller Observation Wheel and several retail and dining outlets along the Linq Promenade. A week earlier, MGM Resorts International said it would reopen New York-New York and Bellagio, initially.
Combined, Caesars and MGM operate 18 Strip resorts.
MGM Resorts acting CEO Bill Hornbuckle told the Associated Press that Bellagio would put just 1,200 of the hotel’s 4,000 rooms on the market. Caesars Palace General Manager Sean McBurney expects that, initially, only one of the 4,000-room property’s six towers will be occupied.
“Once people know there’s an opening date … demand will increase,” he said. “How much? I can’t speculate.”
Wynn Resorts will open Wynn and Encore, but Las Vegas Sands said it will reopen the Venetian’s hotel, but not the Palazzo.
Carlo Santarelli, Deutsche Bank
Santarelli, in his research note, said that the cumulative total, based on what certain companies have announced, covers 35,571 rooms or 40.8% of the major operators’ total room supply, including MGM Resorts, Caesars, Las Vegas Sands, and Wynn Resorts.
Operators of the Sahara, Treasure Island, Cosmopolitan, and Strat said they would also be opening in the initial phase.
“This level of supply, between drive-to traffic and more-aggressive management of customer loyalty programs, could be met with demand, to a reasonable degree, in our opinion,” Santarelli said.
He noted that drive-in traffic to Las Vegas between June and August last year accounted for roughly 28% of the total visitor volume.
Who is coming?
Meanwhile, the phased-in approach advocated by the Gaming Control Board includes limits of no more than 50% maximum occupancy capacity at a property, added spacing between slot machines, and limited seating at table games – three players for blackjack, six for craps, four for roulette, and four for poker.
“While we think the demand uptake could be reasonably sufficient, we expect heavily discounted room rates and a higher mix of casino comps,” Santarelli said.
The challenge for casino operators is assessing demand. Many resorts were accepting hotel room reservations during May, only to have to cancel the bookings or move them up into June. The effort did provide casino marketing offices a database of customers interested in coming to Las Vegas in the post-pandemic era.
The Las Vegas Convention and Visitors Authority has also begun marketing through television ads, including a spot place during Sunday’s highly watched “The Match” golfing event, a competition between Tom Brady, Peyton Manning, Tiger Woods, and Phil Mickelson.
Last summer, Las Vegas Strip occupancy averaged roughly 92%.
“It is reasonable to expect the vast majority of the visitors to be drive-in guests, who would be expected to have a shorter length of stay associated with their trip,” Santarelli said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
