The year 2020 really shuttered the land-based casino industry, as the entire state of Nevada was hit hard by lockdowns, health & safety regulations, and overall lack of attendance.
The revenue dropped by 19.5% year-on-year statewide. However, casinos located on the Strip reported the most significant y-o-y decline of 30.2%. On the other hand, locals revenue fell by 11%.
J.P. Morgan’s gaming industry analyst, Joseph Greff, has a very interesting perspective. According to him, casinos who are paying more attention to locals are a better investment opportunity in the long term.
He stated that the market revolving around Las Vegas Locals was recovering much faster compared to the Las Vegas Strip when gross gaming revenue was taken into account. He used two local casinos — Boyd and Red Rock Resorts — as an example of this after the two properties made third-quarter conference calls.
Greff added that it all makes sense since the general population of Clark County mostly benefits from payroll protection programs, in addition to unemployment checks and the retiree base in the area. Therefore, he stated that they would continue to prefer Las Vegas Locals, such as Boyd and Red Rock, over the operators located on the Strip.
Why Is the Strip Performing so Poorly?
There are two main reasons for the Strip’s underperformance when compared to Locals. The first is that there’s no convention scene at the moment, and it played an important part in mid-week revenues for Strip casinos. The visitation for conventions is down by 49.4% y-o-y for October 2020, according to the Las Vegas Convention and Visitors Authority. This also affected mid-week hotel room occupancy, which was down by 38.6% on the Strip. However, it increases to about 64.2% during the weekends.
The second reason is that the tourists aren’t really as eager to go to the Strip as they were when there was no pandemic. There was a 57% decline in passenger traffic in October at McCarran International Airport. That number is down by 95% for international passengers. The year-to-date decline for international visitors is down by 77.1%, and it seems that Las Vegas won’t get even a million internationals, which is a considerable decline.
You’ll notice that what Greff’s talking about makes a lot of sense when you compare other states to Nevada. For example, the casinos located in Pennsylvania outperformed the ones in Nevada year-on-year for Q3, as the slots revenue was down by 17.2%. Table games also recorded a decline, even though some casinos in PA actually showed improvement year over year.
It’s also important to mention New Jersey, which currently offers online casinos. The state is doing pretty well after allowing its players to gamble online instead of visiting Atlantic City. Nevertheless, the state still saw a decent rebound from its land-based casinos.
To sum up, Strip casinos will have to change something to attract more tourists, or it will be ages before it returns to its pre-Covid state.
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