Las Vegas Casinos Boom Despite Fears of a U.S. Bust

Older consumers are returning to the Strip, shaking off pandemic concerns. International travelers began coming back in recent weeks and the convention calendar looking ahead is getting busier, executives said.

“There are not strong enough words to convey how well it’s going in Vegas for us,” said Caesars Entertainment Chief Executive

Tom Reeg

on an investor call this week.

Families are deciding whether to go on long-delayed vacations, in light of rising grocery bills and fears of an economic recession. But a rush of pent-up travel demand that brought Las Vegas back over the past year is continuing, according to executives and analysts.

The Covid-19 pandemic revealed the particular fragility of Las Vegas’ hospitality economy like never before. On the Strip, casinos that once stayed open 24 hours a day were temporarily closed, sending the Las Vegas area’s unemployment up to more than 31% in April 2020, according to federal statistics.

Over the past year, though, consumers fueled by extra money and desire for fun spent record amounts on gambling, and hotel rates rose.

When casinos were allowed to reopen in June 2020, the average daily hotel-room rate on the Strip had plummeted to about $118, according to tourism officials. This June, the average was $168. Weekend stays at higher-end properties are starting around $500.

Travel spending nationwide hit a pandemic high of $101 billion in May, compared with $100 billion in April, according to the U.S. Travel Association.

In June, visitation to Las Vegas was up about 12% from the same month last year, according to local tourism officials. Still, visitation hasn’t surpassed prepandemic levels.

Many visitors have been eager to plunk their cash into slot machines and blackjack tables. In June, Nevada gambling revenue was about $1.3 billion, the 16th month in a row that gambling revenue exceeded a billion dollars, according to state regulators.

On Wednesday, MGM Resorts International said its Las Vegas casinos—not including properties that were purchased and sold—generated net revenue of $1.6 billion in the second quarter, surpassing the same quarter 2019 revenue of $1.4 billion prepandemic.

“There’s this insatiable appetite for travel experience, the experience-based economy and the millennials stepping into it,” said MGM Resorts Chief Executive

Bill Hornbuckle.

“I think we’ve seen it in all of our properties, particularly here in Las Vegas.”

Mr. Hornbuckle said the company isn’t naive about what the economy might do and is focused on labor costs and other expenses.

“Whether we lever up to the success we’ve had in the last two quarters—or frankly, whether we need to weather the storm coming up—we think we’re in great shape to do that,” he said.

In the second quarter, Caesars’ casinos in Las Vegas generated total revenue of more than $1.1 billion, up nearly 34% from $855 million the same quarter last year.

Hotel occupancy at Caesars’ Las Vegas properties reached 97% at higher room rates, resulting in the highest quarterly hotel-room revenues in the company’s history, the company said.

Mr. Reeg, the chief executive, said that the 55-and-older crowd is coming back to Las Vegas stronger than at any time since the pandemic began and group event bookings are improving. Looking ahead, hotel bookings have picked up in the past few weeks, he said.

“The consumer continues to hold out quite well for us,” he said.

Jeremy Aguero, principal analyst with Las Vegas-based economic research firm Applied Analysis, said the city continues to benefit from consumers’ desire to travel after the pandemic shutdowns, and consumers have had savings and federal stimulus money to pay for vacations. “Las Vegas has also been a lower cost alternative, in many ways, for folks that were looking for a foreign escape,” Mr. Aguero said.

He said his outlook on Las Vegas over the next 12 months is bullish, but the sustainability of the current trends is questionable. “We will see a settling of the market, and exactly what level that settling is at is very difficult to ascertain. Las Vegas is not recession-proof,” he said.

Write to Katherine Sayre at [email protected]

Older consumers are returning to the Strip, shaking off pandemic concerns. International travelers began coming back in recent weeks and the convention calendar looking ahead is getting busier, executives said.

“There are not strong enough words to convey how well it’s going in Vegas for us,” said Caesars Entertainment Chief Executive

Tom Reeg

on an investor call this week.

Families are deciding whether to go on long-delayed vacations, in light of rising grocery bills and fears of an economic recession. But a rush of pent-up travel demand that brought Las Vegas back over the past year is continuing, according to executives and analysts.

The Covid-19 pandemic revealed the particular fragility of Las Vegas’ hospitality economy like never before. On the Strip, casinos that once stayed open 24 hours a day were temporarily closed, sending the Las Vegas area’s unemployment up to more than 31% in April 2020, according to federal statistics.

Over the past year, though, consumers fueled by extra money and desire for fun spent record amounts on gambling, and hotel rates rose.

When casinos were allowed to reopen in June 2020, the average daily hotel-room rate on the Strip had plummeted to about $118, according to tourism officials. This June, the average was $168. Weekend stays at higher-end properties are starting around $500.

Travel spending nationwide hit a pandemic high of $101 billion in May, compared with $100 billion in April, according to the U.S. Travel Association.

In June, visitation to Las Vegas was up about 12% from the same month last year, according to local tourism officials. Still, visitation hasn’t surpassed prepandemic levels.

Many visitors have been eager to plunk their cash into slot machines and blackjack tables. In June, Nevada gambling revenue was about $1.3 billion, the 16th month in a row that gambling revenue exceeded a billion dollars, according to state regulators.

On Wednesday, MGM Resorts International said its Las Vegas casinos—not including properties that were purchased and sold—generated net revenue of $1.6 billion in the second quarter, surpassing the same quarter 2019 revenue of $1.4 billion prepandemic.

“There’s this insatiable appetite for travel experience, the experience-based economy and the millennials stepping into it,” said MGM Resorts Chief Executive

Bill Hornbuckle.

“I think we’ve seen it in all of our properties, particularly here in Las Vegas.”

Mr. Hornbuckle said the company isn’t naive about what the economy might do and is focused on labor costs and other expenses.

“Whether we lever up to the success we’ve had in the last two quarters—or frankly, whether we need to weather the storm coming up—we think we’re in great shape to do that,” he said.

In the second quarter, Caesars’ casinos in Las Vegas generated total revenue of more than $1.1 billion, up nearly 34% from $855 million the same quarter last year.

Hotel occupancy at Caesars’ Las Vegas properties reached 97% at higher room rates, resulting in the highest quarterly hotel-room revenues in the company’s history, the company said.

Mr. Reeg, the chief executive, said that the 55-and-older crowd is coming back to Las Vegas stronger than at any time since the pandemic began and group event bookings are improving. Looking ahead, hotel bookings have picked up in the past few weeks, he said.

“The consumer continues to hold out quite well for us,” he said.

Jeremy Aguero, principal analyst with Las Vegas-based economic research firm Applied Analysis, said the city continues to benefit from consumers’ desire to travel after the pandemic shutdowns, and consumers have had savings and federal stimulus money to pay for vacations. “Las Vegas has also been a lower cost alternative, in many ways, for folks that were looking for a foreign escape,” Mr. Aguero said.

He said his outlook on Las Vegas over the next 12 months is bullish, but the sustainability of the current trends is questionable. “We will see a settling of the market, and exactly what level that settling is at is very difficult to ascertain. Las Vegas is not recession-proof,” he said.

Write to Katherine Sayre at [email protected]