Las Vegas tourism ‘forever changed’ by pandemic as industry recovers: report Buck Wargo, CDC Gaming Reports · June 27, 2021 at 4:51 pm Even as Las Vegas continues its rebound with the opening of Resorts World Las Vegas, COVID-19 has left “an indelible imprint” on both the Southern Nevada tourism industry and the broader regional economy, according to a report that shows the city is even more vulnerable to a downturn in hospitality and gaming than previously thought. The report was prepared by Las Vegas research firm Applied Analysis on behalf of the Las Vegas Convention and Visitors Authority. The “implications of COVID-19 were unprecedented in terms of our community’s core tourism industry” and rippled through every sector of the economy in a “pretty dramatic and meaningful way,” according to Applied Analysis Principal Jeremy Aguero. “Is the industry going to be forever changed because of COVID-19? The answer to that question is absolutely yes,” Aguero said. “The visitors are coming back and that will include business and eventually international travelers, but travel is going to be different for a while. The way we service visitors is going to be different for a while.” Aguero said he looks at the opening of Resorts World on Thursday and its integration of technology and how they’re trying to balance it with human interaction. “The vast majority of jobs will come back, but not because of the way we’ll do things differently in Southern Nevada for our tourism industry,” Aguero said. “I believe the tourism industry is resilient and resourceful and we’re already seeing that play out dramatically in the early stages of recovery from the COVID-19 crisis. But I think the lingering effects of COVID-19 — not the virus itself, but the implications on us as consumers and business operators — is something we’ll be dealing with for an extended period.” Aguero said Las Vegas is “still a year or two away” from tourism numbers returning to where they were in 2019, pre-pandemic. The visitor-volume numbers are continuing to increase and “in some instances, in terms of consumer spend, are superior” to what they were previously. However, he added, “We’re not seeing the rebound of business and international travel yet. Those really do matter in terms of the visitor mix and rounding out our visitor profile. That will take some time.” McCarran International Airport reported Friday that it handled 3.51 million passengers in May, 600,000 more than April and the most since the Las Vegas casinos reopened in June 2020. That’s still 23% below May 2019 figures. On the international front, 31,214 passengers went through McCarran in May, a 90% decline from the 322,256 who passed through in May 2019. In April, the LVCVA listed zero attendance for conventions, compared to 529,500 in April 2019. Large conventions started to return in June with the World of Concrete that had an attendance of 10,000, though that was 50,000 fewer than normal conferences in previous years. “We said early on that we thought the recovery cycle was between 18 and 36 months and we’re about 18 months into this process and have probably another 18 months before we’re back to something that approaches normal for Las Vegas,” Aguero said. “It doesn’t mean we’re not seeing great improvement, but this economy was not designed to operate at 90%.” Aguero said Las Vegas has always known its economy “is narrow” compared to other economies in the U.S., but the ripple effect has been tremendous on suppliers to the gaming and hospitality industry and local businesses whose employees earn their wages, salaries, and tips from tourism. “We think about how unusual the closure of the Las Vegas Strip was in a historical context,” Aguero said. “In terms of the implications for local restaurants and other retailers and goods and service providers, it shines a very bright light in terms of how dependent our broader economy is on people’s decisions to get on a plane or get in a car to come to Las Vegas.” Aguero said the lesson isn’t to abandon the industry that got Las Vegas where it is, but to seek out multiple specializations and further diversify its economy. “It’s important to understand that we need to diversify our economy. There’s no doubt about that whatsoever. Making sure the sustainability of our tourism industry isn’t mutually exclusive of that effort is also critically important. The sustainability of our core tourism economy is something we can’t forget as part of our broader economic development plan in Nevada and Southern Nevada.” The point was punctuated by the Applied Analysis report for the LVCVA. Compared to recent economic downturns, the COVID-19 recession’s magnitude was “unprecedented in its depth and speed,” the report said. The report cited Las Vegas visitor volume falling to 19 million in 2020, a 55% drop from 2019 and the lowest annual total more than 30 years. On a yearly basis, visitation fell 55 percent, but focusing on the pandemic timeframe between mid-March and December 2020, visitation fell about 67 percent compared to the same period in 2019, the report said. Worse, the 1.7 million convention attendees in 2020 marked a 74 percent drop from the record of 6.6 million set in 2019 and fell to its lowest total since 1989, as well, as conventions, trade shows, and business meetings were cancelled through most of the year. Convention and meeting visitors spend more per trip on average than leisure visitors, making the return of this segment a vital component of the overall recovery in visitor volume and economic impact, the report said. Business visitors help boost occupancy and room rates during midweek periods with less demand from leisure visitors. The report noted that at times in 2020 and early 2021, some resort properties closed their hotel operations midweek due to lack of demand. In 2019, the passenger count at McCarran International Airport set a record of 51.5 million. A year later, the total dropped 56.9 percent to 22.2 million, the lowest yearly total since 1992, the report said. Average daily traffic counts on Interstate 15 at the California border, an indicator of drive-in visitation, declined in 2020, but to a much lesser degree than air passengers. The average daily traffic count of 37,500 dipped 16.2 percent on the year. Historically, the 2020 figure was in line with the 2008 figure. The occupancy rate in Southern Nevada dropped to an unprecedented 42.1 percent in 2020, a direct result of visitor volume tumbling amid the pandemic, the report said. Prior to 2020, the lowest annual occupancy rate recorded was 68 percent in 1970 and the most recent low point was 80.4 percent in 2010 following the Great Recession. Las Vegas’ economy was especially vulnerable, because in 2019, it had the highest U.S. share of employment sourced to the tourism industry at 28.6 percent. Unemployment in the region spiked to 33.3 percent in April 2020 and averaged a record 14.7 percent in 2020, the report said.