They Will Return

This month, we pass the one-year COVID-19 mark. The pandemic and its associated shutdowns, travel restrictions, and economic losses disrupted much of the national gaming industry, but had a particularly brutal impact on the Las Vegas Strip. Once the leading light of American gambling, the Strip has been hurt by the very things that, for decades, made it so prosperous: easy connections to much of the country, an anything-goes mentality, and international appeal.

The casinos of the Strip were particularly vulnerable to the pandemic, not only because it put a temporary halt to gaming on casino floors. Casinos across the country (mostly) managed to emerge from the acute shutdown phase of April/May/June relatively intact. Ohio and Maryland casinos, for example, were posting year-over-year revenue increases as early as July. New Jersey casinos, buoyed by booming internet and sports betting win, reported year-over-year increases in September (though brick-and-mortar revenue still lagged).

Even in Nevada, the Strip has been slower to recover than the reporting areas it once outshined. Over the past six months, for example, gaming win on the Strip is down nearly 44 percent compared to the previous year. Win in downtown Las Vegas is up nearly 7 percent, while the locals casinos of the Boulder Strip and Washoe County in the north are about flat.

Even before the pandemic, downtown and other areas were routinely beating the Strip when it came to percentage increases in gaming win. While the Strip’s slots and tables remained well below their pre-recession highs, downtown casinos actually improved considerably in the period 2009 to 2019 and posted their best revenue year ever in 2019.

The Strip wasn’t panicking, though, for two reasons. First of all, downtown gaming win remained about 10 percent of Strip gaming win; Strip casinos were still making plenty of money, they just weren’t growing as quickly as downtown. Second, non-gaming spend on the Strip was booming. In fiscal 2014, Strip resorts beat their pre-recession room-revenue high and, until the shutdown, had not looked back. Food, beverage, and entertainment spending saw similar patterns. The resorts of the Strip seemed to have reached a stage where they were no longer dependent on gaming — a welcome evolution in a world where gambling has become nearly ubiquitous.

For the past two decades, the Strip has been built on a mix of drive-in Southern California visitors, domestic fly-in customers, business travelers, and international tourists. The first group has seen a decline of about 17 percent — not great, but not terrible. Airline traffic, on the other hand, has plummeted by more than 62 percent, with international arrivals — once the most lucrative customer segment — down precipitously.

A resort town facing a 50 percent drop in room occupancy would be in deep denial not to be afraid for its future. Some have interpreted Las Vegas Sands’s recent exit from the Las Vegas market after over 30 years as a sign that Las Vegas’s best days are behind it. That’s an interpretation that may have some merit; Sands’ founder Sheldon Adelson was a contrarian who championed conventions as a viable revenue stream in the early 1990s, while other operators saw no value in them. The gaming empire he subsequently built, as well as the major investments other resorts made in convention facilities, vindicated him. If the company he built is pulling out of Las Vegas now, what do its leaders see that no one else does?

I don’t have the answer to that question, but I can offer some slender insights into the future of business travel, based on my own experience running a small online conference last month.

It was the Far West Popular Culture Association’s 33rd annual conference. For the past several years, it was held at Palace Station, which was easily accessible to those driving in from other parts of Las Vegas and those flying in to stay for the weekend. This year, though, the pandemic forced a move online.

The conference’s remote format afforded us some conveniences. No one had to worry about the hassles of travel, taking time off from work, or the costs of airfare and rooms. We did not have to shoulder the burden of designing and paying for a print conference agenda. Up to the night before the conference, I was able to make changes in the schedule that would have necessitated printing and distributing corrections to a glossy printed schedule. We were able to host two excellent out-of-town keynote speakers without worrying about the logistics of arranging flights, transportation to the hotel, and meals. All in all, it was far easier than running a conference in person — and supremely more cost-effective.

Yet for all of the energy that the conference staff put into coordinating the show and for all the hard work the attendees put into perfecting their presentations, even the most enthusiastic conference-goer would have to admit that something was missing. We read our papers, had lively Q&A sessions, and even, I think, managed to make a few connections. It would be great for a monthly get-together to share a few new ideas. But it was in no way a substitute for an in-person meeting. The real experience, the real connections, just weren’t there.

Keep in mind that this was a relatively small group of academics, none of whom was selling anything. I can only imagine just how much more lacking the experience is for even a minor trade show, let alone the mega-expos that once thrived in Las Vegas. It may be more expensive to meet in person, but it’s incalculably more rewarding.

Las Vegas has seen many changes over the years and the pandemic will undoubtedly leave a permanent imprint on the city and its casinos. Business travel might not be the same as it was before COVID, but it will be back.