Every year all Nevada casinos submit something known as a standardized financial statement to the Nevada Gaming Control Board. The report is prepared for the same time period as Nevada’s fiscal year so it reflects the financial activity of the casino from July 1 through the following June 30. The state does a lot of things with this information, one of which is to aggregate it then prepare the annual Gaming Abstract Report.
Nevada’s 2017 Gaming Abstract was just released (covering July 1, 2016 through June 30, 2017) and shares some very interesting information. Unfortunately the report does not share information on a property by property basis but it does share broad categories based on revenue ranges for certain geographical areas, and when compared to prior years tells some very interesting stories.
The section of the report I always turn to first and have done so for many a decade is the one that groups all the top Las Vegas Strip properties and shares the average revenue per room per day for the categories of: Pit, Slot, Food, Beverage and Rooms Revenue.
For the 12 months ended June 30, 2017 there were 24 gaming properties that had gaming revenue in excess of $72M that had available room nights totaling 27,257,977 from which they had 25,480,488 rooms occupied for a 93.48% occupancy. Clearly a whole lot of people were in those 24 properties with a whole lot of sold out weekends.
The properties further enjoyed an average of $100.53 a day per room in pit revenue; 110.15 a day per room in slot revenue; $99.83 a day per room in food sales; $46.19 a day per room in beverage sales; and $182.37 average room rate per day. All interesting information but fascinating that the average revenue for food was only 70 cents less per day than the average pit revenue.
To really tell a story though, comparing numbers to a prior period provides even more meaningful insights. Since I had a worksheet already set up comparing 2016 numbers to 1996, I included 2017 and got the following: In 1996, there were 19 properties on the Las Vegas Strip that were in the over $72M a year gaming revenue club that had available room nights of 16,531,319 from which they had 15,666,788 occupied for an occupancy of 94.77%.
Back then the average pit revenue per room per day was $94.65; average daily slot revenue per room was $92.48; average daily food revenue per room was $41.91; average daily beverage revenue per room was $17.74; and the average daily room rate was $79.19.
In general, economics and common sense dictate. When demand exceeds supply prices go up and conversely when supply exceeds demand prices go down. Of course prices should also reflect inflation as well. Inflation from 1996 to 2017 was 56.2%, meaning something that cost $100 in 1996 should cost $156.20 in 2017, if all other things are equal of course.
So if the average daily per room revenue numbers from 1996 had kept pace with inflation to 2017, the expected revenues per day per room should have been: pit $147.94, slots $144.55, food $65.51, beverage $27.73 and rooms $182.37. Comparing them to the actual results above, pit is behind inflation by 50.09%, slots are behind inflation by 37.19%, while food is beating inflation by 81.9%, beverage is beating inflation by 104.07% and rooms are beating inflation by 73.99%.
Perhaps as gaming has expanded globally, coming to Las Vegas just to gamble is not as big a priority as it used to be. Perhaps because the resorts are simply charging more for rooms, food and beverage the consumers just do not have that much left over in the wallet available for gambling. I believe the reality is the customer coming to Las Vegas is now more experience driven than gaming driven and a quality resort experience has cut into both the budget and time the customers have available for gaming.
That said, I also believe the numbers are saying the current casino gambling experience is just not as high a priority or of that much interest for the current generation of patrons until the next new thing comes along that integrates elements of gaming into a unique experience adventure and boosts interest in gaming. Till then who would have guessed many years ago the current average customer would rather spend $50 a day on drinks than gamble the $50 and drink free.