Las Vegas is a relatively new city in world standards, but what it lacks in history it makes up for in allure. ‘Sin City’ as it has been nicknamed has a strong recent history of attracting tourists from all over the United States and indeed, all over the world.
The legalisation of casino gambling in Nevada State led to a boom in casino construction in Las Vegas which made it the must-visit destination for worldwide gamblers. Obtrusively bright shows of opulence have since come to characterise Las Vegas, and it is this lurid ‘tackiness’ that attracts visitors.
Why go to Paris to see the Eiffel Tower when you could have a quick look at it on your way to a Las Vegas casino on the strip? The famous Pyramids? Exactly the same, just go see them in Vegas a city that has mimicked ancient landmarks as a way of creating its own distinct identity.
But Vegas faces problems in the tourism market. Sin City is starting to fall behind other global gambling powerhouses, and like most things in the modern world is facing the threat of being gobbled up by the all-knowing power of the internet.
In this article we’ll take a look at the extent to which Las Vegas depends on the revenues of the tourism trade. Further to that we will detail the obstacles that Vegas must overcome if it is to regain its crown of the most popular gambling destination in the world.
What drives the Las Vegas economy?
In city terms Las Vegas is fairly small, with just over 640,000 permanent residents but it does punch above its weight in terms of revenue. The second largest sector in Las Vegas is the mining industry which is what initially drove the growth of the city.
The surrounding desert is rich in mineral deposits, some of which is gold and was used in the medals for the London Olympics in 2012. This sector employs just below 15 thousand people in Vegas with an estimated 4 times as many people being employed as a direct result of the industry.
Vegas’ biggest economic sector is the Leisure and Tourism industry which is largely made up of casinos. Over 420,000 people are employed by the leisure and tourism trade yearly in Vegas – whether that be on full-time or seasonal contracts.
However with casinos workers being paid a measly $8 per hour on average, the economic prosperity of Vegas clearly doesn’t come from the average worker paying back into the city. The revenue in this sector comes from out-of-town in the way of unlucky gamblers blowing their money in one of Vegas’ resplendent casinos.
The revenue generated from the gambling industry alone in 2016 was over $60 billion for Las Vegas! Whereas the mining industry brought $2.6 billion into not just the Las Vegas economy but the wider State economy. Perhaps it’s a bit of an understatement to say that the gambling sector is vital to the prosperity of Vegas then!
Is the tourism boom over for Vegas?
Judging by the statistics that would certainly seem to be the case. Monthly visitor figures to Vegas have dropped from around 12 million to 10.5 million in recent months with casino groups such as MGM reporting decreases of around 7% in total occupancy.
At the moment the fall in visitor figures doesn’t seem to have had too much of an impact on the Vegas economy, as those that are visiting are reportedly spending more money. However experts feel that is not a sustainable trajectory and that sooner or later, falling visitor figures will severely harm Vegas’ economy.
What’s driving falling tourism figures?
Macau: Companies such as Las Vegas Sands and MGM International may inadvertently be behind the falling popularity of Vegas. These conglomerates have set their sights on Macau, China and opened bigger and better versions of their Las Vegas casinos in Macau.
The former Portuguese colony is not far behind Vegas in visitor figures and is already dwarfing its American counterpart in terms of gambling revenues. If Vegas is not careful, its place as the home of gambling could soon be taken by Macau.
Online casinos: The high-street, sports stadiums, music venues and casinos are all suffering as a direct result of the internet. The best online gambling providers in the business offer interactive games to customers, with enough choice to satisfy every type of casino gamer – the statistics suggest increasing numbers of people are playing these impressive live casino games, rather than visiting Vegas itself. Sin City was once so popular because it was one of the few places where you could bet carefree, but now the internet means people can get a similar experience without the expensive overheads.
Terrorism: Nearly a year ago Las Vegas was shook by devastating scenes as a gunman went on a killing spree in the city. Unquestionably this has had an impact on visitor figures to Vegas, despite the best efforts of local authorities to increase public security. Fortunately for The Las Vegas tourism sector, the effects of this are not predicted to damage the economy for much longer.
How can Vegas claw back popularity?
Quite simply Vegas needs to diversify and find new ways to attract visitors rather than relying on the tactics that have been successful in the past. A new generation of potential gamblers (Millennials) are not as impressed by the gaudy nature of Vegas as their parent’s generation.
The 18-30 market in the United States and in the majority of the Western World are driven more by experiences and interactions. Vegas must update its image and offer more experiences for young potential customers in order to thrive.
Rather than fighting online gambling, Vegas should be focusing on ways to incorporate it into its business plan. Perhaps offering customers memberships to play in their Vegas casinos via live streams or something similar.
Importantly, if Vegas is to continue as a thriving hub of gambling activity, the major casino holdings in the city need to redirect more of their attention to their Vegas casinos. The Macau market may be growing, but if conglomerates take their eyes of the ball they could be left with a successful casino in China and a struggling one in the United States rather than having both succeed.