Nevada casinos will reopen after a 2½ month closure, but it won’t look the same and recovery will take time.
Gov. Steve Sisolak said Tuesday night statewide casinos are on pace to open June 4 and the Nevada Gaming Control Board will make a further announcement Wednesday on requirements for reopening. The board got assurances from health professionals earlier in the day that the state’s COVID-19 caseload is constrained and the medical system is positioned to handle tourists and local residents should cases increase.
The reopening of casinos is part of Sisolak’s Phase 2 for reopening the state’s businesses. Included will be bars that don’t serve food, gyms, places of worship with a 50-person limit using social distancing guidelines and sporting events without spectators.
The governor’s office had an audio press conference after canceling an in-person news conference due to potential exposure to the coronavirus.
“People feel confident they can welcome back guests in a safe environment,” said Virginia Valentine, president of the Nevada Resort Association. “I say it’s important we get it right, and we’re ready. I believe looking at some of the health and safety plans, that every reasonable precaution they are doing for screening, social distancing, masks and disinfections are well thought out. They are doing everything they can that’s humanly possible to make this a safe experience.”
Sisolak ordered the closure of casinos effective March 18 to deal with the spread of COVID-19. When they reopen it won’t be the same Vegas experience with casino workers wearing masks and constantly wiping down surfaces and ban on large gatherings. Earlier this month, the Nevada Gaming Commission approved guidelines that would trim capacity in half, require distancing at slots, and limited seating at table games.
The board is expected to issue additional guidance Wednesday. It won’t include a smoking ban some are pushing because that would take an act of the Nevada Legislature. Control Board Chairwoman Sandra Douglass Morgan alleviated concerns that there would be any rollback of a facemask guideline for employees.
“Right now face coverings are being recommended (by governmental entities), and the licensees would have to provide that to their employees,” Douglass Morgan said. She added that casinos should have face coverings available for patrons who should be encouraged to wear them in public spaces.
During the written public comment section, concerns were raised on whether Nevada was opening its casinos too soon as the coronavirus remains a threat.
“This agency, our health officials and the governor are all concerned with the safety of employees and visitors, and we’re concerned with folks potentially attracting COVID,” said board member Phil Katsaros. “That’s why we shut down a multi-billion dollar economy.”
Several of the gaming companies have made arrangements to have their employees tested even though employees can’t be forced to be tested, Douglass Morgan said.
There was testimony from University Medical Center CEO Mason Van Houweling and health professionals calling for hotels to provide temperature screening of guests on arrival; ensure a medical professional is on site at the property to diminish the burden on the health care system and require hotel guests complete a symptom self-assessment on check in.
“Those are all reasonable requirements that our health care professionals would recommend for resort hotels,” Douglass Morgan said.
There was a proposal to have an area where guests can be tested for COVID-19 and await the results and be quarantined at designated non-gaming hotels if they test positive.
There will be a lot of national attention on Las Vegas with the reopening and need not to have the city viewed as a place people contract COVID-19 and die from it. Casinos will be under a lot of pressure to keep that from happening and keep social distancing.
“The difficulty is executing that at scale,” Corey Padveen, a partner with t2 Marketing International. “When you look at the Bellagio fountains and there isn’t two inches of space between people and now you are asking people to stay six feet apart while this famous show is going on. It’s going to take a lot of careful planning and some infrastructure development to ensure it can be applied in casinos but the public displays.”
As for the expectations when the resort industry reopens, Carlo Santarelli, managing director for gaming and lodging research for Deutsche Bank Securities, issued a report saying they expect the first phase of reopenings to represent 41 percent of the Strip hotel room capacity.
“At this stage, we think it’s likely an overestimation of capacity, as we believe there to be a reasonable chance that floors/ towers remain dark in the early stages,” Santarelli said in his report.
Santarelli added that he expects heavily discounted room rates and a high mix of casino comps and that “demand uptake could be reasonably sufficient.” The vast majority of visitors will be those who drive, which will mean shorter stays, he said.
Between June and August 2019, the Strip occupancy averaged 92 percent with 87,000 competitive rooms, Santarelli said. Las Vegas has about 150,000 rooms overall.
Brent Pirosch, director of gaming consulting at CBRE in Las Vegas, said it’s “all new territory” on trying to predict what the occupancy rates are going to be in the coming months.
“Half of the visitation to Las Vegas comes from air travel, which will be muted and 25 to 33 percent of the total traffic is driving visitation from Southern California,” Pirosch said. “Half of the customers are going to have a challenge getting here if they can at all.”
Brian Gordon, a principal at Las Vegas research firm Applied Analysis that makes projections for the resort industry, said it’s “going to take some time to ramp up operations and sometime for consumers to respond to new market realities.” There may be some pent-up demand initially, but the initial restrictions on casino capacity will limit what can happen at first, he said.
The health crisis will ultimately dictate the economic recovery in the leisure and travel industries, Gordon said.
“For the resort industry in Southern Nevada it’s likely the recovery cycle will take anywhere from 18 to 36 months,” Gordon said. “It will be more likely to gain momentum several months out as the health crisis is further vetted.”
Local casinos are better positioned to see customers but Nevada has a 28.2 percent overall jobless rate that makes that more challenging. Las Vegas tourism benefits from low national unemployment and high consumer confidence.
Valentine said it will take a couple of months to see what the recovery looks like.
“I think it will be a slow ramp to normal,” Valentine said. “I think people will come back in the beginning, and we will see a bump from those who feel cooped up and want to get out and see Vegas. I think the locals market and driver’s market will come back first. As people become more confident and comfortable with airline travel, we will see domestic visitation return. “Eventually, international travelers will return. But it’s going to take a while to get back to normal and it’s going to look different when we get back to normal.”
David Schwartz, a UNLV professor and gaming historian who gave an online lecture on the future of gaming in Las Vegas and how it can come back, said there shouldn’t be any more pressure on the resort industry because anything that happens now will be an improvement over total closure. In looking at history, Schwartz said “It seems things are going to have to change no matter what happens in the rest of the world because we’re not going to continue as we are.”
Schwartz said there’s nothing to be lost by experimenting and doing things that casinos wouldn’t have tried a year ago.
“Everything we try will gain us something, whether knowledge or progress,” Schwartz said. “Casino floors will evolve to be less dense and no more big rows of slots. That has been going away for several years, and I can see that trend hitting fruition. We may see rows of six, and I can see little pods of two or three.”
There will be more open space and fewer employees and more digital interface, Schwartz said. He said he expects that the handling chips and cash are something only the biggest players do. Other players will be asked to use a cashless interface and put a deposit on a card, he added.
While there will be changes, hospitality won’t go away because people have been traveling and visiting exotic locations for thousands of years, Schwartz said.
“Human nature won’t change, but I think it will be different,” Schwartz said. “Are we going to get back to having 5,000 rooms full in one building? I don’t know, but I foresee that might not be happening right away so we should adjust.