2020 has shown the weakness of the Las Vegas strip. That has industry experts suggesting that local casinos are a better business model long term.
October revenue numbers out of Nevada spelled the picture in a nutshell. Statewide revenue was down 19.5% year over year, but the Strip was hit hardest with a 30.2% drop. Locals revenue only fell by 11.1%.
Joseph Greff, a J.P. Morgan gaming industry analyst, suggested that casinos that cater to locals are a better investment as a result:
“The Las Vegas Locals market is exhibiting a faster recovery than the Las Vegas Strip gross gaming revenue, as evident on Boyd and Red Rock Resorts third-quarter earnings conference calls — which makes sense given the general Clark County area population benefit from payroll protection programs and unemployment checks and the retiree base in the area. We continue to prefer Las Vegas Locals exposed operators, Boyd and Red Rock Resorts over Las Vegas Strip operators.”
There’s two major reasons the strip is performing so poorly in comparison. First of all, the convention scene that usually makes up a big part of mid-week revenues is gone. The Las Vegas Convention and Visitors Authority has reported visitation was down 49.4 percent in October year over year, and for the 2020 year up to that point, was down 54.2%. Midweek occupancy is coming in at only 38.6% for the strip, but rises to 64.2% on weekends.
Secondly, tourists just aren’t coming. McCarran International Airport saw a 57% decline in passenger traffic in October, in line with their overall decline for the year so far. International passengers have dipped dramatically as well, down 95% in October, and 77.1% for the year.
International passenger counts are even more pronounced. In October, passenger traffic counts were down 95 percent while for the first 10 months of 2020 they’re off 77.1 percent. Based on current projections, McCarran won’t see 1 million international passengers this year.
It also reported midweek occupancy rates of 38.6 percent on the Strip compared with 64.2 percent on weekends.
For seven of those 10 months, the LVCVA recorded no convention traffic and for the year, convention visitation is off 69.6 percent.
Greff’s assessment rings even more true when you look at competing states on the other side of the country. Pennsylvania casinos performed better than Nevada year over year in their Q3, with slots revenue falling 17.2% and table games dropping, but with some casinos showing improvement year over year. New Jersey is killing it with online revenues, but has also seen a decent rebound from casinos.