Las Vegas resorts had about a 50 percent occupancy last weekend with their reopening and some locals’ casinos had gaming revenue that rivaled a weekend in June 2019 with stronger historic foot traffic compared to the Strip, according to analysis released Wednesday by Deutsche Bank Securities.
That shouldn’t be viewed, however, as a recovery from the COVID-19 shutdown, effective March 18. Strip resorts benefited from limited properties being open — a dynamic that will change with more reopenings. Neighborhood properties benefited from pent-up demand that will taper off because of the economy, the report said.
In its report this week, Fitch Ratings said “There will be a slower recovery in Las Vegas given the market’s cyclicality, longer booking windows and reliance on air capacity and conventions.” Business travel and the convention industry that propelled Las Vegas’ midweek scene has evaporated with social distancing.
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Meanwhile, Carlo Santarelli, managing director for gaming and lodging research for Deutsche Bank Securities, said “Incremental scheduled openings speak well to a ramping book of demand for Strip assets in the near term.”
On Tuesday, Caesars Entertainment announced plans to reopen The LINQ Hotel gaming floor on Friday, but the hotel will remain closed for now. MGM Resorts International announced the Luxor and The Shoppes at Mandalay Bay Place will reopen on June 25. That will be followed by ARIA, Mandalay Bay, and Four Seasons Las Vegas on July 1 when visitation is expected to be stronger than the opening weekend.
Deutsche Bank said more will be in the offing.
“While many properties are taking reservations beginning on July 1, no formal announcements have been made about their reopening and we believe many of these will likely be pushed back in the coming weeks,” the report said.
Between June 4-5, about 47,000 rooms opened on the Strip, representing 57 percent of the Strip supply. But the report said that’s based on using 100 percent of occupancy and properties are using less for crowd control and social distancing.
“We expect 74 percent (65,000 rooms) set to be open on July 1, and we believe this is likely to rise as some of the Caesars Entertainment assets are accepting reservations,” the report said.
Santarelli said Strip room rates and offers so far have “been low and friendly.”
As for foot traffic, Deutsche Bank said its findings are based on geolocation technology from cell phone pings. They compared the June 4 reopening weekend to the comparable timeframe in 2019.
“As expected, demand as measured by foot traffic at locals’ casinos has been stronger than that of the Strip on a year-over-year basis,” the report said. “With 54 percent of Strip rooms open and limited inbound (flights) into Las Vegas, we are not surprised to see aggregate foot traffic across the 32 Strip properties that our data tracks, down 77 percent (overall) over the period from Thursday, June 4 through Sunday, June 7.”
For properties that opened, however, that means traffic was down 57 percent year-over-year, the report said.
With 80 percent of locals’ casino capacity reopened, Deutsche Bank said “we believe gaming spend per patron has been nicely higher, with some properties experiencing gross gaming revenue that approximates prior-year results in the early days post opening.”
One gaming analyst earlier this week cited Red Rock Casino Resort in Summerlin for its opening. Deutsche Bank said the strong showing among some locals’ casinos resembled what happened with regional casinos that benefited from people driving a short distance to their properties.
“We expect the drive-to/locals markets to open strong and taper off to better align with local macro dynamics in the near to medium term,” the report said.
Based on its data from June 4-7, Las Vegas locals’ traffic was down 29 percent year-over-year but down only 11 percent among the properties that opened, the report said.
