Seven days a week, 365 days a year, tourists come and go from the Las Vegas Strip. But over the past few weeks, it seems fewer visitors, especially those from Asia, are willing to travel here, especially after the U.S. government restricted travel from China and other nations in response to the growing coronavirus outbreak.
Wynn Resorts, Las Vegas Sands and MGM Resorts International are Las Vegas-based companies that took a huge hit when Macau officials closed their casinos last month for two weeks amid the spread of the coronavirus, also known as COVID-19.
Gaming analysts say it’s too soon to tell the impact from the outbreak on Las Vegas, but Wynn, Las Vegas Sands and MGM have warned investors in annual reports and conference calls with investors that travel restrictions could negatively affect their Las Vegas properties.
“The U.S. government has put in place restrictions on travel to the U.S. from Mainland China, and could expand those restrictions,” Wynn said in its annual report filed with the U.S. Securities and Exchange Commission. “A significant portion of our US business relies on the willingness and ability of premium international customers to travel to the U.S., including from mainland China. As such, our Las Vegas operations and operations at Encore Boston Harbor may also be adversely impacted.
“Given the uncertainty around the extent and timing of the potential future spread or mitigation of the Coronavirus and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition.”
The Las Vegas Convention and Visitors Authority said overall visitor volume and hotel occupancy were up 3.9 percent in January to 3.54 million visitors, compared to the previous year, while visitor figures for February haven’t been released.
Also, in January, gaming revenues on the Strip posted a 7.49 percent increase to $572.12 million, from $532.24 million last year, according to the Nevada Gaming Control Board.
But at least two major events set for March in Las Vegas have been canceled: The Trump administration called off said the Association of Southeast Asian Nations, or ASEAN summit, set to take place March 14, and reports say Google has canceled a company event.
“We think coronavirus headlines will continue to dictate share price movement in the near-term despite the first quarter looking strong,” said SunTrust Robinson Humphrey gaming analyst Barry Jonas.
“While management teams continue to emphasize no discernible impact to forward-looking booking trends so far, the situation warrants monitoring to see if CDC announcements and reports on new cases in the U.S. begin to impact consumer and/or corporate travel decisions,” Jonas said in a note to clients.
Other annual reports and comments by gaming executives reiterated Wynn’s caution.
Jim Murren, CEO of MGM, said the closure of its Macau casinos cost the company about $1.5 million per day in operating expenses, a majority of which was payroll. At Wynn, the cost was between $2.4 and $2.6 million per day, while Las Vegas Sands didn’t release cost figures during the shutdown.
“While the coronavirus … will clearly have a near-term impact to MGM China, we remain confident that it will not have a long-term impact on our business,” Murren said.
Caesars CEO Tony Rodio said the company was not seeing any decline in visitation as a result of the coronavirus, also known as COVID-19, outbreak in China.
“It is obviously on the top of everybody’s mind,” Rodio said. “To date, we are pleased and pleasantly surprised [to] say that we’ve seen no business impact whatsoever. As a matter of fact, we’re off to a great start in 2020 from our VIP business from Asia.”
Rodio added that the company is working on contingency plans should the situation begin to affect business in the United States.
Tom Reeg, CEO of Eldorado Resorts, said the company has seen no impact from the COVID-19 outbreak.
Worldwide the number of infections has topped 92,000, while the death toll is now at 3,168. In the United States, 109 cases have been reported with nine deaths in the state of Washington.
The outbreak in Washington state has impacted the gaming industry there as the Confederated Tribes of the Umatilla Indian Reservation confirmed their Wildhorse Resort and Casino was temporarily closed to sanitize the facility after an employee tested positive for COVID-19.
As Gaming Today went to press Tuesday, there are no confirmed cases of COVID-19 in Nevada.
“Communication, knowledge, and transparency are key in this evolving situation, and we will be working diligently to ensure that accurate and relevant information continues to be shared with the public,” Nevada Governor Steve Sisolak said.
Sisolak said the Centers for Disease Control and Prevention (CDC) recently acknowledged that more confirmed cases are likely to be identified, so “it is incumbent on me to ensure that out state continues to prepare for any scenarios.”