Six months ago, the Strip was just a plane ride away for people seeking top-notch shows, sports, concerts and expos.
These days, it’s a road trip for something people may already find closer to home.
“Las Vegas is rolling back to the old days where it’s all about gambling,” said Greg Mullen, vice president of CDC Consulting. “You don’t have your nightclubs, you don’t have your sports, you don’t have your concerts.”
Industry observers say Strip resorts face a unique challenge in attracting visitors without those amenities or significant air travel.
Resorts must both offer something that other, possibly closer, gambling destinations don’t and persuade potential guests those offers are worth a road trip during a pandemic.
“A Buffalo machine at the Wynn is the exact same Buffalo machine at San Manuel in Southern California,” Mullen said.
Six months in
Conventions, group and air travel have been on hiatus since mid-March, when Gov. Steve Sisolak ordered all nonessential businesses in the state to close in a bid to stop the spread of the novel coronavirus.
Despite most casinos reopening June 4 or since, business has been anything but usual.
According to the Las Vegas Convention and Visitors Authority, visitor volume in July was down 61 percent compared with the same period last year.
Through the end of July, McCarran International Airport saw 44 percent of the volume of air travel it did at the same time last year with 13.3 million passengers compared with 29.7 million passengers during the first seven months of 2019.
“We continue to believe that material recovery will be dependent on the return of conventions, entertainment and significant air travel,” MGM Resorts International CEO and President Bill Hornbuckle told investors on a July 30 earnings call.
MGM and other hotel-casino operators have focused their efforts on attracting local and regional customers with deals, promotions and waived fees.
The six largest Las Vegas-based gaming companies declined to provide information about where guests are visiting from, but several executives noted California and Arizona in second-quarter earnings calls.
Wynn Resorts Ltd. CEO Matt Maddox told investors in an Aug. 4 the company is operating under “a very different business model,” leaning on promotions, offers and business partnerships to get Southwesterners into the valley.
“Without the convention base, without the nightclub crowd, without the large shows, we’ve become super regional,” Maddox said, adding that nongaming revenue was down about two-thirds.
“We’re doing everything we can to get heads in beds in the hotel and really focused on how we can get more of our drive-in market here on a more frequent basis,” he said.
The average daily room rate in Las Vegas was $104.39 in July, down 18 percent from the previous year, LVCVA data shows.
MGM Resorts, Caesars Entertainment Inc. and The Cosmopolitan of Las Vegas dropped parking fees as they prepared to reopen this summer.
“Everything is on the table” to bring in new business or bring back old customers, and it is “easier to turn on and turn off” something like parking fees, said Nehme Abouzeid, president and founder of consulting firm LaunchVegas, LLC.
Sahara Las Vegas temporarily dropped resort fees in a bid to bring in new customers with an offer that expired Aug. 31 and is now offering “an array” of promotions, a Sahara spokesperson said, including waived resort fees for educators and “significant discounts” for “essential heroes.”
“Next, you’ll see attempts to cultivate entirely new market segments, like MGM’s promotion aimed at the ‘work from anywhere’ crowd,” Abouzeid said, adding that sports fans may be another marketing target this fall as professional sports continue to restrict them from arenas.
But there’s a limit to how steep discounts and promotions can get, he said.
There are only so many gaming tables a resort can add and promotions it can give to bring gamblers into town before it reaches a point of “diminishing returns,” Abouzeid said.
All of the marketing campaigns, deals and promotions up and down the Strip try to solve the same problem: “We are in the middle of the desert,” UNLV hospitality professor Mehmet Erdem said.
The Strip might be in a more favorable position were Las Vegas, all else being equal, located somewhere more densely populated like the East Coast, he said. The sprawl of the West’s major cities means many potential visitors have an hourslong drive separating them from Las Vegas.
The Strip sans sports, shows and expos represents an involuntary return to its gambling roots, and potential visitors are now left to decide whether Las Vegas is worth the drive if they can gamble closer to home.
There’s plenty of competition outside Nevada. There are 136 casinos throughout Arizona, California and New Mexico combined, all of which are tribal save for five commercial casinos in New Mexico, according to the American Gaming Association. Gambling is outlawed in neighboring Utah.
California has 77 tribal casinos, with 27 of them in Southern California. Seventeen of Arizona’s 27 casinos are within a five-hour drive of Las Vegas.
As it stands, Erdem said, the city’s tourism industry relies heavily on the carbon economy, namely traffic from Southern California, to fuel business and fill its hotel rooms. That’s harder to do when nightlife — the “charisma” of Las Vegas — isn’t available, he said.
Traffic on Interstate 15 near the California was down 16 percent through the first three weeks of August compared with the same time last year, though that’s a marked increase from April, when traffic volume at the border was down 66 percent compared with April 2019, according to the Regional Transportation Commission.
‘Escape from reality’
Even a pandemic can’t dampen the allure of Las Vegas for Ricky Martin, a 23-year-old resident of Ontario, California. Martin said he booked a stay at Harrah’s from Sept. 25-28 to celebrate his 24th birthday and his friend’s 22nd birthday.
Martin got a Los Angeles-area deal by booking directly though Harrah’s parent company, Caesars Entertainment Corp., that gave him 30 to 35 percent off his room rate, he said. It’s a nice perk, but he’s just excited to return to Las Vegas six months after his last visit, St. Patrick’s Day weekend — he said he was sitting at the Tilted Kilt inside of The Linq Hotel when the state shut down.
Making the roughly 3½-hour drive to Las Vegas, where he’ll join a group of about 12 friends and family, will be worth it regardless of any coronavirus-related closures or restrictions, he said. He hopes to use a ticket he bought for the High Roller before the shutdown in March when he returns at the end of the month.
“Just stepping into one of the casinos, stepping out onto the Strip and just seeing the lights, seeing the smiles on everyone’s faces, seeing the fountain at the Bellagio,” Martin said, “It’s just that escape from reality.”
Contact Mike Shoro at [email protected] or 702-387-5290. Follow @mike_shoro on Twitter.