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Oliver Lovat sees parallels between the coronavirus pandemic’s impact on Las Vegas and the MGM Grand Hotel fire that was just memorialized with its 40-year anniversary.

Lovat, the CEO and managing director of consulting firm the Denstone Group, said just as Las Vegas was prepared to become a sports hub with the opening of Allegiant Stadium, COVID-19 has challenged the future of the city.

Lovat said 2021 will be an inflection point and compared it to what happened to Las Vegas in the early 1980s with a recession, opening of Atlantic City, and the Nov. 21, 1980 MGM Grand fire that killed 78 guests and seven employees. Less than three months later, eight people died at a fire at the Las Vegas Hilton. Those two fires made people leery to come to Las Vegas out of fear they would die in a fire.

Even though Las Vegas in 1981 became a leader in fire safety in hotels with sprinklers and smoke detectors, it wasn’t until the opening of the Mirage, nine years and one day from the MGM Grand fire that Las Vegas started to recover in the 1990s with more resort development and greater visitation.

Lovat said Las Vegas faces a similar challenge today and cited that the opening of Resorts World Las Vegas on the Strip next summer may be a “game-changer” to help with the recovery. That’s not going to be enough because the recovery of the convention industry to boost midweek occupancy is going to take longer, even with a vaccine likely available for the masses in the second quarter of 2021.

Lovat said Las Vegas can’t rely on a reactionary approach, which he said is unsustainable as it faces competition from regional casinos and other destinations for conventions and business travelers. He and other consultants just completed a national survey that showed more than 50% of casino customers will continue going to Las Vegas properties. That matches the October visitation to Las Vegas that showed 1.85 million people visited the city, a decline of 49.4% over October 2019.

The same survey showed about 25% will return to casinos once they’ve been vaccinated. Another 11% to 13%, however, are going to take longer to return — a year after a vaccine is delivered.

“Despite the concerns presented, there are clear positives,” Lovat said. “If operators address the offering to meet customer needs, such as addressing smoking in resorts, managing the occupancy levels of food and beverage and allaying security fears, there’s a path to recovery. Some 64% of respondents plan to return to Las Vegas in the next 12 months.”

Lovat called it “astonishing” that Las Vegas will finish 2020 with 19 million to 20 million visitors given the pandemic shuttered the industry in late March, only to reopen in June. That’s below the 42 million visitors in 2019. Lovat said it won’t be until 2022 that Las Vegas returns to where it was in 2019 and said one way resorts can help themselves in 2021 during midweek to fill the void is with cruise ship customers who are unable to take trips. Tapping that market will help make up for “a big hole” caused by a lack of conventions.

“We believe there’s still a large unmet demand for some customers that would come to Las Vegas if they were curated offerings midweek,” Lovat said. “For example, the type of customer that would normally go on a cruise would come to Las Vegas with a programmed schedule. Casino resorts are about coming and doing stuff, whereas the cruise models are more programming.”

That means art, lectures, music, and set food menus as part of a package, Lovat said. These older and cautious customers would feel more comfortable if they had resort areas more to themselves, he said.

“You can get a premium for that,” Lovat said. “The cruise-line industry has been decimated. Those people who take cruises this time of year want to go somewhere that’s safe and programmed. There’s enough people living in a driving radius from Southern California.”

Lovat said his survey shows that the majority of local residents are still avoiding the Strip. Most of the Strip business is coming from out of state. Las Vegas residents like what their neighborhood casinos are offering and fear the Strip is more of a dangerous place to go with large crowds.

“They are aware the virus is not going away and aren’t putting themselves in harm’s way,” Lovat said.

Remembering Hsieh

Las Vegas lost a visionary last week when former Zappos CEO Tony Hsieh died following a fire at a family member’s home in Connecticut. He was 46 years old.

His Downtown Project allocated tens of millions to aid in the revitalization of downtown Las Vegas. It has invested $200-plus million in real estate, $50-plus million in small businesses, $50-plus million in education and $50-plus million in tech startups.

Hsieh even bought the former Gold Spike casino and turned it into a boutique hotel and bar.

UNLV economics professor Stephen Miller said Hsieh had a long-term focus.

“His efforts on downtown development went against the tide. There may still be additional payoffs to come in the future,” he said.

UNLV professor and gaming historian David Schwartz said of Hsieh: “He had an incredible impact on downtown Las Vegas, including the casinos of Fremont Street and its environs. He was critical in sparking the revival of East Fremont, which helped to re-establish downtown as a destination.

“This, along with new investment from several ownership groups, helped the downtown casinos reverse their earlier declines and, on a percentage increase basis, out-perform the giants of the Strip.”

Schwartz said Hsieh’s biggest legacy might be the relationships he had with many downtown figures.

“He was a believer in collisions and connections, and it’s comforting to think that many of the partnerships that he enabled will continue to shine in Las Vegas for a very long time,” Schwartz said of Hsieh.

About the Author

Buck Wargo

Buck Wargo is a former journalist with the Los Angeles Times and has been based in Las Vegas as a business, real estate and gaming reporter since 2005.

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