Las Vegas Resorts Experience 50% Occupancy Rates During Reopening

Las Vegas Resorts Experience a Mixed Reopening Weekend

As Las Vegas resorts swung open their doors last weekend for the first time since the COVID-19 shutdown on March 18, they witnessed a bittersweet return to business. With around 50% occupancy rates, the reopening weekend offered a glimpse into the post-pandemic future of one of the world’s most vibrant entertainment hubs. Despite the modest start, some local casinos saw gaming revenues on par with a typical June weekend in 2019, indicating a strong, albeit selective, resurgence in foot traffic.

Las Vegas resorts reopened after a COVID-19 shutdown on March 18, 2020, with Nevada lifting all capacity restrictions as of June 1, 2021, allowing casinos and hotels to operate at 100% occupancy.

However, industry analysts caution against viewing this as a full recovery. The initial surge in occupancy and revenue, particularly for Strip resorts, was partly due to the limited number of properties available. This dynamic is expected to shift as more establishments resume operations. Similarly, the spike in local casino patronage is attributed to pent-up demand—a factor that may dwindle amidst ongoing economic uncertainties.

The Road to Recovery: A Slow and Steady Climb

Fitch Ratings, in a recent report, highlighted the challenges ahead for Las Vegas. The city’s reliance on air travel capacity, conventions, and its cyclic market nature suggests a prolonged recovery period. The once-bustling midweek scene, fueled by business travel and conventions, has been hit hard by social distancing protocols, leaving a noticeable void in the city’s vibrant atmosphere.

Despite these hurdles, there are positive signs on the horizon. Deutsche Bank Securities notes an increasing demand for Strip assets, indicating potential growth in the near term. This optimism is echoed by the scheduled reopening of major resorts like The LINQ Hotel’s gaming floor and the Luxor, alongside retail areas such as The Shoppes at Mandalay Bay Place. The anticipation is building for July when iconic venues like ARIA, Mandalay Bay, and Four Seasons Las Vegas will welcome guests anew, potentially boosting visitation figures beyond the initial reopening weekend.

Adapting to a New Normal

As Las Vegas navigates its reopening phase, the approach to occupancy and safety measures has been cautious. In early June, approximately 47,000 rooms were made available on the Strip, representing 57% of its total capacity. This deliberate limitation, aimed at ensuring crowd control and adherence to social distancing guidelines, underscores the city’s commitment to public health while striving to reignite its tourism industry.

Interestingly, the strategy for room rates and promotional offers has been notably customer-friendly, likely as a means to attract visitors during these uncertain times. This approach seems to have paid dividends, particularly among local casinos, where gaming spend per visitor has notably increased according to Deutsche Bank’s analysis. This uptick, powered by geolocation data from cell phone pings, showcases a stronger year-over-year foot traffic in local casinos compared to the Strip’s more tourist-centric establishments.

Yet, the overall foot traffic across the 32 monitored Strip properties was down 77% from the same period in 2019, highlighting the ongoing challenges facing Las Vegas in its recovery journey. For those properties that did open, traffic was still 57% lower year-over-year, a stark reminder of the pandemic’s impact on one of the city’s key economic drivers.

Looking Ahead: A Gradual Return to Form

As Las Vegas gradually reopens, the initial enthusiasm among locals and the strategic reopening of properties offer a glimmer of hope. However, the road to recovery is expected to be long and filled with challenges. The city’s ability to adapt to the new normal while ensuring the safety of both residents and visitors will be crucial in determining the pace and success of its revival. With more properties slated to open in the coming weeks, all eyes will be on Las Vegas as it navigates this unprecedented landscape.