Has Las Vegas rebounded from the Great Recession?
According to a group of experts at the Global Gaming Expo, not yet.
Casino executives and analysts said Wednesday that although the city has made great strides since the local economy flat-lined in the late 2000s, it still has a way to go. Room rates remain low, tourism numbers have fallen short of expectations, and many projects remain mothballed.
Several strategies, however, are in play to try to make Southern Nevada boom once again, they said.
The arrival of the SLS and Gansevoort hotels, as well as the Genting Group's plans to build Resorts World Las Vegas on the site of the former Echelon, all are indicators that a recovery is picking up steam. Casino companies also are adjusting to visitor demographics that have changed.
“A decade ago, about 60 percent of our revenue was generated in the casino and the rest came from other amenities, like hotel rooms, food and beverage and attractions,” MGM Resorts International executive Dan D’Arrigo said. “Now, it has flipped. The reality is that we had to change because of the proliferation of gaming elsewhere, and we had to differentiate our product, particularly to businesspeople in conventions and to international visitors.”
Las Vegas’ economy no longer is as resilient as it once was.
“We can throw out phrases like ‘recession proof,’” D’Arrigo said.
Bill Lerner, a gaming analyst with Las Vegas' Union Gaming Group, said today's gambler is younger than a decade ago. Nightclubs and day clubs have become more popular than slots and tables.
Casino companies have responded with projects that cater to a younger Generation X and Generation Y crowd, said panelist Dennis Farrell of Wells Fargo Securities. Caesars Entertainment is building the Linq, while MGM Resorts is developing a park and retail walkway outside New York-New York and the Monte Carlo.
Lerner said Las Vegas’ goal to attract a larger number of international visitors also will change the city's customer profile. Tourism leaders hope to grow international visitation to 30 percent. About 40 million tourists visit Las Vegas annually.
D’Arrigo said international visitors spend twice as much on entertainment and shopping as domestic travelers and 1.5 times more on food and drinks. A higher number of Asians would increase baccarat play, which tends to generate the highest table game profits for casinos, he said.
Groundbreaking on the 3,500-room Resorts World next year and its opening in 2016 could be the biggest Strip energizer, the panelists said.
“In addition to all the construction jobs the project will create, there will be a long-term effect with 8,000 new jobs on the books,” D’Arrigo said. “That project will also give Las Vegas another touch point in international marketing.”
A new attraction would likely increase visitation to the city, Lerner said.
But the uptick might not necessarily jump-start other dormant projects, such as Fontainebleau, Lerner said. Owner Carl Icahn has financial resources to keep that property mothballed for years until a suitable deal is reached.
The opening of the SLS, Gansevoort and Resorts World could make the Fontainebleau property more valuable, Lerner said, but wouldn't likely rush Icahn into making a less-than-desirable deal.