Despite the recent national surge in COVID-19 cases, one gaming analyst predicted that high-profile events related to the National Football League will boost Southern Nevada visitation in the first part of the year.
Another expert, according to Daniel Politzer, who follows the gaming sector for Wells Fargo Bank, expects the Strip’s gaming market will fall in 2022. According to Politzer, gaming and non-gaming revenues generated by Strip resort operators with several locations, such as MGM Resorts International and Caesars Entertainment, might increase by as much as 20% in 2021, a year that is already shaping up to be a record-breaking year.
“We regard the Las Vegas Strip as providing the greatest tangible chance for gaming top-line growth,” Politzer wrote in his study, which was released on Friday. MGM Resorts, Caesars Entertainment, and Boyd Gaming Corp., according to him, are in the best position to profit from a future market boom.
Given the continued concerns over COVID-19 and the Omicron variant, he said a “linear recovery” could be difficult, but that demand for hotel rooms from tour and vacation clients, as well as an expanding conference industry, will help the Strip’s financial situation in 2023 and beyond.
Politzer noted, “Leisure-oriented citywide events… should bridge to a gradual recovery of group and convention revenue.”
As a result, he informed investors that the Strip would fare better than most regional gambling jurisdictions, which will face greater competition, higher spending levels, customer-attractive incentives, and rising labor expenses.
Politzer’s estimates come as Strip casinos and the whole Nevada gaming business have established new revenue records in the first 11 months of 2021. The figures for December will be announced at the end of January.
Strip casinos are already 7.2 percent ahead of the nation’s largest gaming market’s 2019 total of $6.58 billion, which came after the epidemic dropped the state’s gaming revenue numbers to their lowest levels since the 1990s.
Nevada casinos have already had their third-highest gaming revenue year, with $12.3 billion in revenue through November.
In a December research study, Deutsche Bank gaming analyst Carlo Santarelli stated that gaming revenues in both Las Vegas and the rest of the country could fall in 2022, compared to last year.
“The recovery in Las Vegas Strip gaming income in 2021 exceeded even the most positive projections, driven mostly by domestic travel consolidation and increased spending levels,” Santarelli stated.
Two more reasons, according to Brendan Bussmann, a partner at gaming industry analyst Global Market Advisors, will play a role in 2022. He believes that a continued recovery in Las Vegas is dependent on the return of international visitors and an increase in tour and travel business.
In November, nonstop service to and from London was reinstated at Harry Reid International Airport, which had only seen direct flights from Canada and Mexico for the last part of 2021. In December, KLM added additional international flights from Amsterdam to Latin America via Copa’s Panama City hub.
“While both will require some time based on current pandemic trends,” Bussmann, who is not a financial expert, wrote in an email, “these are the two tranches that still have significant recovery.” “Once the world opens up again, the consumer will encounter headwinds with economic as well as other options, resulting in a slowdown.”
Crowds and gamblers will be drawn to the events.
The NFL Pro Bowl game at Allegiant Stadium, the NHL All-Star game at T-Mobile Arena, and festivities related with the two games, according to Politzer, are catalysts for higher visitors that will enhance occupancy at Strip resorts.
The three-day NFL Draft in April is likely to provide a similar boost. The event, which was originally scheduled for April 2020 but was postponed due to COVID-19, will take place at different locations around the Strip.
Bussmann concurred, stating that weekends with home games for the Las Vegas Raiders contributed to higher average daily hotel rates on the Strip.
“Looking for new revenue tranches is another crucial to long-term Las Vegas recovery,” Bussmann said. “Sports and other huge events have begun to address those long-term growth needs.”
According to Politzer, airline capacity for flights into and out of Reid Airport in the first quarter of 2022 is expected to be 2% higher than the first quarter of 2019. He noted that this implies the airlines are anticipating an increase in visitor numbers.
“We see that in the second half of 2021, Las Vegas flight passenger traffic began to trend higher,” Politzer said, noting that November’s almost 4 million travelers was just 4.4 percent lower than the amount for November 2019 before the epidemic.
Business at conventions is picking up.
Following meetings with representatives from three separate Strip resort operators, Politzer also predicted that the convention and meeting business, which is a key driver of midweek hotel occupancy, might pick up in the second half of this year when previously canceled events resurface.
MGM Resorts expects a full convention recovery later this year, according to him.
Politzer noted, “Group night bookings (for MGM) looked healthy not only for 2022, but also for 2023 and 2024.”
Thanks to its newly enlarged conference facilities, Wynn Resorts is pacing “far over 2019 levels,” he said. Caesars’ group and convention reservations for the second half of 2021 were 18 percent higher than the same period last year, and group business in 2022 was 15 percent higher than in 2019.
“The feedback from resort operators has been positive,” Politzer said.
The Las Vegas convention industry was destroyed by COVID-19.
Following a record-breaking year in 2019, when the Las Vegas Conference and Visitors Authority (LVCVA) reported over 6.6 million convention and trade show attendance, the year 2020 saw only 1.7 million, with no convention attendees for the final nine months of the year. In 2021, only a few concerts visited Las Vegas.
Politzer said there are roughly two dozen events planned for the first three months of 2022, bringing in upwards of 750,000 visitors and increasing hotel room occupancy.
The LVCVA reported that hotel occupancy was 66.3 percent through November, with 86 percent on weekends.
Politzer dug down the figures, calculating that the average Las Vegas Strip occupancy in the second half of 2021 was around 79 percent, up from 57 percent in the first half of the year. During the middle of the week, he claimed, the occupancy levels were the lowest. That, though, could change.
“As the virus appears to be spreading, we expect group and convention business to gradually return as consumers become more comfortable participating in large gatherings,” he wrote in the research. “This should position Las Vegas for year over year industry revenue growth in 2022.”