Year after year, the revenues have been dropping and the big casinos in Las Vegas have been having to devise different ways to generate more income. The Spring and early Summer months are also usually something of a high-spot in the year for them – but the complete loss of income across March, April and May due this year dealt a hard blow to the economy of not just the Strip, but across the whole state.
So, it was with great relief that the announcement was received that, providing the right measures were in place, casinos could start re-opening from the start of June.
As you might expect, it was the big names who were first to open their doors again with Bellagio, Caesars and Circus Circus welcoming players from June 4th. A week later they were joined by Excalibur and, two weeks after that, Luxor. Since then there has been a steady stream of re-openings including the Mirage on August 27th. Some ultra-cautious establishments remained closed into September, notably the Four Seasons and Planet Hollywood but it’s expected that by mid-October the whole Strip will be up and running again. However, whether revenues will have returned to normal levels by then is a highly debatable point.
The figures aren’t great
Bloomberg reported that gaming revenues from the Strip in July amounted to $330.1 million, a 31% drop from the same period in 2019. State-wide, the picture wasn’t quite so bleak with the $756.8 million figure being only 26% lower than the previous year – but hardly encouraging news either.
In sheer statistical terms, it’s fairly self-evident exactly why this shortfall is occurring. In the official statistics for July the number of visitors for the month was 1,438,000 – a reduction of 61% from the total in July 2019. This also meant that room occupancy levels were right down to 42.5% compared with the corresponding 2019 figure of 91.1%. Another measure of just how well, or badly, things are going in the tourist economy is a figure called the “Revenue per available room” (REVpar). In July 2019, this was $127.38. But, this year, the figure was just $48.37, a huge 62% fall.
Admittedly, this has not simply been due to a lack of gamblers in the city. The fact that the convention business has been brought to a total standstill has also had a major effect. In July 2019 there were almost half a million conference attendees in the city, in July 2020, none.
Some of the reasons
Of course, there are many other reasons why the numbers, and therefore the revenue, are failing to recover at the rate that might have been hoped for. The first is obviously the problems associated with long-distance air travel. There are fewer flights meaning higher prices, and the general restrictions of travelling with social distancing are also strong disincentives to travel. The scale of the issue is easy to see when one looks at the gloomy predictions for the airline industry this year.
Then there are the changes that the casinos have had to make themselves to comply with the restrictions. Normally open, sociable areas, the new normal is that there are plexiglass screens dividing players from dealers, use of hand-sanitisers is enforced and there are even measures in place to avoid the betting chips being too widely handled. In purely financial terms, the fact that only half of the slot machines in any bank of them can be used is effectively cutting the revenue they raise by 50%. And that’s before you even factor in the fewer numbers of players.
Then there is the question of the shows for which Vegas is so famous. These draw in huge numbers every year to catch acts ranging from Rod Stewart to the Cirque Du Soleil. But with the stages dark and gatherings of more than fifty people forbidden, it’s a huge hit to sustain.
Some casino groups, most notably Caesars, have come up with a number of initiatives to raise extra revenue. But whether this will prove to be enough remains to be seen.
The advantages of online
Of course, while Vegas may be suffering, there is one sector that has been a winner as a result – online casinos. In keeping with a general trend over the last few years, more and more people are turning to the online versions of their favourite games. It’s more convenient than having to get dressed up for a trip to the brick-and-mortar equivalent and the increasing sophistication of the live online casinos capture much of the ambience and excitement of being there in person.
The fact that the activity isn’t expressly banned in the majority of States across the US also means that their citizens are free to play online. Not only Vegas, a typical example is also Michigan, a state where there is a wide selection of online casinos for choose from, with no specific legislation preventing players from enjoying them. Add to this the very attractive bonuses that many offer to new players and it’s no surprise that they prove to be so very popular.
So, even if visitor numbers and expenditure do continue to rise in Las Vegas, it seems like the online casinos may soon have the upper hand. There will be many along the Strip hoping this isn’t the case, but it may just prove to be inevitable.