Since the end of pandemic-related restrictions, the operators on the Las Vegas Strip have slowly built their business back to pre-pandemic levels. In 2022 that recovery was a bit lumpy as older travelers, international travelers, and some business travelers did not return to their previous patterns.
You can blame covid for some of that and perhaps fears that we're heading into a recession for at least some of the business woes. But, while certain segments struggled, the overall business on the Las Vegas Strip hit record levels.
DON'T MISS: Caesars Quietly Making Major Las Vegas Strip Resort Casino Change
That's why even while the pandemic still hampered operations, the major players never stopped investing. Caesars Entertainment (CZR) redid the entrance at Caesars Palace and revamped the former Bally's into its Horseshoe brand. MGM Resorts International (MGM) sold the Mirage and bought The Cosmpolitan and Wynn Resorts (WYNN) spent tens of millions remodeling its rooms.
And, while Caesars and MGM dominate the central and south Strip, the north section of the famed road got some attention as well. Resorts World Las Vegas opened its massive resort casino during the pandemic while the nearby Fontainebleau, a project that had been stalled for 20 years, landed a $2.2 billion deal to finally finish construction.
Even Circus Circus got a fairly major overhaul, while multiple new Las Vegas Strip resort casinos are in varying stages of development. It has been a banner time for the Las Vegas Strip with gaming revenues driving the ship.
That ship, so to speak, could be in for some rough waters if you believe the American Gaming Association's annual outlook.
Image source: Robert Mora/Getty Images
Expect Gaming to Slow (Even On the Las Vegas Strip)
"Growth in the U.S. gaming industry continued at a strong pace through the first quarter of 2023 but is expected to decelerate over the next six months," according to the AGA Gaming Industry Outlook, presented by Fitch Ratings.
The report comes from a survey of 26 executives from major international and domestic gaming companies, tribal gaming operators, single-unit casino operators, major gaming equipment suppliers, and top iGaming and sports betting operators. It's not exactly a doomsday scenario, but the data does suggest some slower times ahead.
"The weaker outlook evident in the Future Conditions Index reflects a baseline economic outlook that anticipates a mild recession during the second half of this year, as well as a shift to a more cautious view of future conditions by the Gaming Executive Panel. While most executives view current business conditions as good, the view on future conditions is more balanced, with two-thirds of executives expecting future conditions to be 'satisfactory,'” according to the report.
It's not that the survey respondents expect business to crater, they simply don't expect it to get better although that sentiment was not universal.
"Overall, almost all respondents characterized the current business situation as good (62%) or satisfactory (35%), but panel participants shifted to a more cautious stance on future conditions, with only 20 percent expecting future conditions to be better and two-thirds expecting future conditions to be the same (64%)," according to the report.
Las Vegas Strip Leaders Do Have a Plan
On the Las Vegas Strip a potential slowdown is relative given how strong numbers have been.
Nevada Gaming Control Board Economic Analyst Michael Lawton essentially explained it to the Las Vegas Review-Journal that the "record statistics" from 2022 make for tough comparisons. He shared that while Nevada casinos won $1.31 billion from gamblers in March -- the second best March ever and the 25th month in a row where casino winnings exceeded $1 billion -- the number actually represented a 3.2% drop over the previous year.
April, May, and June of 2022 were also records which creates some tough comps.
"It’ll go on and on like that through November (second-highest win was in November 2022) then until March 2024, which will be compared with March 2023 (second-best March) and 2022 (best March ever), wrote the Review-Journal's Richard N. Velotta.
And while business travel may stay down and some personal travel may go away due to economic fears, Las Vegas's long-range planning will help keep it strong. The Las Vegas Strip will close the year with the Formula One Las Vegas Grand Prix in November, a massive event for which Caesars, MGM, Wynn, and every other Strip operator has jacked up prices.
In addition, the biggest sporting event on the global calendar -- the Super Bowl -- takes place at Las Vegas Allegiant Stadium in Feb. 2024. Those two events may not make up for the overall economic woes that could pull Las Vegas' gaming business down (relatively) speaking, but they should provide a higher floor.
