Economic recovery Las Vegas will take at least 3 years
The economy of casino city Las Vegas has been hit very hard by corona. Experts fear recovery could take up to three years. Or even longer. On Wednesday, March 18, all casinos, restaurants, theaters and cafes in Las Vegas had to be closed by order of the US government. The reason: the coronavirus outbreak. From one day to the next, the normally buzzing casino capital of the world turned into a deserted ghost town.
19 billion dollar up in smoke
A number of casinos are now open again, but due to all the corona measures and the absence of tourists, they are running at half to minimum strength. There are still no shows in Las Vegas and many hotels, restaurants and bars are still closed. This is a big disaster for the Las Vegas economy, which largely depends on gamblers and tourists. In 2019 tourists brought in $ 19 billion and 450,000 jobs were needed to service the tourists and gamblers that paid Las Vegas a visit.
Those $ 19 billion are largely gone for this year and the question is if there is hope for a speedy recovery afterward? Many casino experts are quite pessimistic about the future of the gambling capital of the world. A striking number of experts assume a three to four year malaise before the turnover returns to pre-corona level. That means that the casinos will have to fight to survive until 2023 or 2024. And with a stretch that long they all agree that not all casinos will survive. The state’s economy is also disproportionally dependent on people getting in a car or getting on a plane and going on vacation.
Zero is exactly how many convention attendees the Las Vegas Convention and Visitors Authority clocked from the beginning of April till the end of July, the last month for which numbers are available. By comparison, 2.06 million conventioneers traveled to Las Vegas during that period last year. Las Vegas’ economy, forever dependent as it is on tourism and events, shed 142,200 jobs — 82,700 of them in the entertainment and hospitality fields — during the 12 months ending in June, according to the U.S. Bureau of Labor Statistics.
Tourists avoid Las Vegas because of Corona
Casino analyst Chad Beynon, affiliated with the Australian investment bank Macquarie Securities, among others, also does not see a short term recovery. According to him, it is necessary that there is a vaccine before the economy in Las Vegas can be back at full speed. And if that vaccine is available, at the end of this year or sometime next year, it will still be a while before everyone is vaccinated and there are no more local outbreaks of corona. Until then, many tourists will avoid Las Vegas because they fear for their health. If all goes well, Chad Beynon thinks of a recovery from 2023: “Our bull case scenario points to 2023 being the break-even year.”
The Strip recovers less quickly
Well-known American credit rating agency Fitch Ratings follows Beynon’s analysis and thinks a “full recovery” is impossible before 2023. In addition, analysts at Fitch Ratings warn that the economic recovery on the Strip will last the longest in Las Vegas. That is not surprising. Because it is precisely the mega casinos on the Strip that run on foreign visitors. Casinos in Downtown Las Vegas, such as the famous El Cortez, also attract some local gamblers who want to spend an hour behind a slot machine: “Recovery will be the slowest on the Strip, given its greater reliance on inbound visitation, air capacity, and conventions. Regionals are less cyclical than Las Vegas and should recover quicker, as they have mostly local, drive-in visitation.”
Photo credit: Jez Arnold