Gaming analysts said the reopening of Las Vegas’ resorts and casinos went as well as could be expected, but the industry’s recovery will be slow during the summer until Labor Day weekend and potential return of any convention business in the fall.
Casinos aren’t releasing any occupancy figures but based on observations at resorts over the weekend and reports from airlines and travel industry trackers, Las Vegas has a long way to go. The Strip has more than half of the city’s 150,000 rooms and about 41 percent of the Strip rooms were available, according to analysts.
“I think opening weekend was about as good as you could expect,” said John DeCree, global head of institutional research at Union Gaming. “Casino operators had no idea what to expect
for demand and the flight capacity was limited. We didn’t see the long-haul flights from the East Coast. A good part of the country is still closed off, and the international component will be closed off for a while.”
Many casinos off the Strip frequented by locals and with strong customer databases such as the Red Rock “were strong like a typical weekend,” DeCree said. “That’s a good sign there was a pent-up demand. We saw decent crowds at the Strip casinos at check-in lines at the Flamingo, Bellagio and Caesars Palace. But those buildings are so big it’s hard to say what the occupancy was.
“There was a video of the Cosmo Saturday night, and it looked like a typical Saturday night. They had one of the best turnouts as it relates to the casino floor.”
Brent Pirosch, director of gaming consulting at CBRE in
Las Vegas, said casinos require about a 40 percent occupancy rate to break even.
“The operators are focused on their best customers first, and they’re going to make sure they’re taken care of,” Pirosch said. “Buffets and entertainment, which are lower margins, have been taken out so the margins are probably going to start out to be very strong.”
Gaming and travel analysts said the elimination of convention business due to COVID-19 will be evident Monday through Thursdays until that possibly returns in the fall (if social distancing requirements are relaxed) with the Global Gaming Expo scheduled for Oct. 5-8. There were an average of 500,000 convention visitors in June and July 2019 when Las Vegas saw more than 3.6 million visitors a month on average.
Las Vegas will be a weekend city for now and rely on locals and people driving in from California and neighboring states since people are reluctant to fly, analysts said.
Bill Obreiter, director of the tourism and hospitality division for Adara that tracks consumer travel behavior, said “Vegas is in a tough spot according to the data we see coming through.” Search demand for Las Vegas trips has been down more than 70 percent, but there’s hope with searches for Labor Day weekend and October down only 30 percent, he said.
“Thirty percent of people aren’t getting on a plane regardless,” Obreiter said of searches being down.
Erin Francis-Cummings, president and CEO of Destination Analysts, a tourism research company, said many people aren’t looking to fly until the end of 2020 or early 2021 at the earliest. Their anxiety about the coronavirus is still high, and only one in 10 people in a survey said gambling was one of the first things they wanted to do when they emerge from their quarantine.
Southern California drive-in visitors will have to lead the way. But even those numbers have a ways to go.
According to Caltrans, northbound vehicle traffic on the I-15 near Baker (south of the stateline) was 24,170 on Friday, up 37 percent compared to the previous Friday but down from 26 percent from 32,826 on the first Friday in June 2019. Sunday traffic heading southbound was 43 percent higher over the previous Sunday to 24,747 but down 26 percent from 33,730 on June 9, 2019.
“I don’t see people leaving for a while with the political climate and people out of work,” Obreiter said. “People are scared to leave their home to go to work and going to Vegas is the last thing many are thinking about. That’s why Vegas won’t return this year. Time will be the cure.”
DeCree echoed that and suggested no one should think Las Vegas is back. It’s not even close, although he suggested MGM Resorts International announcing it will open Excalibur on Thursday and possibly Aria by the Fourth of July weekend is a positive sign. MGM has already opened the Bellagio, New York-New York, MGM Grand and The Signature.
“I’m looking forward to the July 4th weekend to see that as the gauge,” DeCree said. “That gives us a couple of weeks to get a sense of demand. Hopefully the rest of the country starts to open up and customers get a little more comfortable hopping on a plane and then we will be on the road to recovery.
“If the economy is on the path of reopening and people don’t see a spike in coronavirus cases, we might see things pick up (the rest of the year) and that puts Las Vegas in position for a good 2021 when international travel and convention booking (returns).”
When it comes to COVID-19, DeCree said his team monitored more than 20 casinos and while employees were required to wear face masks, DeCree said they estimated about one of 10 customers on the Strip did so, a figure he said was surprising given the dangers of the coronavirus.
“There were a lot of questions going into it for casinos getting ready and comply with (Nevada gaming requirements) for social distancing. Hopefully, it only gets better from here and companies will get better at implementing hygiene and safety practices and consumers will get more comfortable with it as long as we need it.”