Between Cancellations, Closures and Layoffs, Las Vegas Hammered By Pandemic
Las Vegas casinos reopened on June 4 as Nevada relaxed some closures to help slow the spread of coronavirus. The current scene in the casinos is very different, with 50% capacity on the gaming floor. Social distancing, bar and restaurant closures and limiting the number of guests changed the Vegas casino experience.
Two months later, Las Vegas is in a post-lockdown period, but the pain hasn’t stopped. Coronavirus cases haven’t stalled in the city, much less in the rest of the country. Casinos in Vegas and around the country are still reeling from being closed. Las Vegas casino owners continue to lay off and furlough employees. Many gaming enthusiasts switched to playing at online casinos during quarantine and stuck to those games afterward to avoid crowds once casinos reopened.
Visitation to Las Vegas was down in June by 70.5% from last year. That’s bad, but it could have been much worse. Not everyone is staying away. According to the Las Vegas Convention and Visitors Authority, vehicular traffic was down just over 13% from the same period last year. Regional guests are still driving to Las Vegas — mainly Southwest US residents looking for a quick weekend escape — but not as many as in previous years.
During a recent earnings call, Wynn Resorts CEO Matt Maddox said the company is looking at Las Vegas as a “super regional” market drawing guests from California and Arizona. Wynn Las Vegas even started a promotion with regional luxury airline JSX.
While the casino operators are doing all they can to bring in guests, it seems there are more leaving Sin City with COVID-19 than ever. The Las Vegas Review-Journal reports that 347 visitors tested positive for COVID-19 after returning home from Las Vegas in July. This is an increase from 123 reported in June.
There’s no end in sight. Layoffs are continuing, conventions are being canceled or postponed and some popular casinos may not be reopening any time soon.
M Resort set to lay off 300 employees
National casino operators started to announce permanent layoffs in July. Penn National Gaming (PNG) has 43 properties throughout the country but only two in Las Vegas.
The Tropicana remains closed, while M Resort in Henderson reopened with most Nevada casinos on June 4. The company announced it would lay off employees but didn’t specify when and where. Now comes word that Tropicana may not reopen on Sept. 1 as planned and layoffs are about to begin at M Resort.
The Las Vegas Sun reports that more than 300 M Resort employees will be permanently laid off in August because of the effects of the coronavirus pandemic. In a letter to the Department of Employment, Training and Rehabilitation, PNG said, “These significant drags on our business will likely continue for the foreseeable future.”
PNG is planning for the worst-case scenario with the Tropicana. While the casino’s website says it will open on Sept. 1, the company isn’t acting that way. PNG sold the land underneath the Tropicana earlier this year. Now the actual property is on the market. The Reno Gazette-Journal reports that the Tropicana is preparing to lay off more than 600 employees in October regardless of whether the property reopens.
Among other layoffs, Boyd Gaming cut a quarter of its workforce.
A few weeks ago, gaming giants MGM Resorts and Caesars laid off a significant portion of employees, though part of Caesars’ layoffs were a restructuring due to its merger with Eldorado Resorts. Indeed, Nevada is facing a new number one position as the state with the highest unemployment.
But as in all historic periods of depression, the city always eventually bounces back big. Once the job market is stabilized and employment numbers are up, people are likely to again crave the fun, glitzy escape and indulgent vacation only Las Vegas can provide.
Major Las Vegas convention cancellations
The hits will continue into 2021 as major conferences continue to cancel. In recent weeks, the Consumer Electronics Show (CES), Specialty Equipment Market Association (SEMA) and the Adult Entertainment Expo and AVN Awards have announced the cancelation of 2020 and 2021 events. The Electric Daisy Carnival music festival — a huge moneymaker for the city — was pushed back for the second time, originally moving its May dates to October before canceling the 2020 festival altogether and rescheduling for May 2021.
CES is the single largest convention annually in Las Vegas, with nearly 200,000 attendees. Its cancellation is a massive blow to Vegas hotels, which are usually near capacity or sold out entirely for the week. Typically, with virtually every room booked, hotel room rates are among the highest of the year.
In addition to booking almost every hotel room, many of the convention visitors come to Las Vegas armed with expense accounts, so it’s a boon for the convention and resort business as a whole. Restaurants are always packed, clubs (adult and dance) are busy and rideshares are almost impossible to secure without surge pricing. This cancellation is gut-wrenching to every type of business in Las Vegas.
SEMA is another busy convention, with about 160,000 attendees. While the big conferences have a major impact throughout the city, smaller conferences and expos like the AVN Awards affect hotel occupancy and dining at individual properties. These cancelations impact businesses large, medium and small in Las Vegas.
Large group travel to Las Vegas is being canceled entirely or pushed back. During MGM Resorts’ second-quarter earnings call, a rep said 2 million room nights were canceled. About 1 million of those nights were rebooked for a later date. Of course, those rebooked dates are based on the hope that travel to Las Vegas will be possible in the latter part of 2021.
Station Casino properties reopening on hold
Station Casinos operates 10 casino-hotels in Las Vegas. In May, the company announced a phased reopening plan that would bring six casinos back in June. Red Rock Casino, Green Valley Ranch and four other properties reopened when Governor Sisolak allowed casinos to open their doors. Palms, Texas Station, Fiesta Henderson and Fiesta Rancho remained closed while business ramped up.
During a recent earnings call, Station Casinos CEO Frank Fertitta III said, “It’s too early to make that decision (on reopening) at this time.” That’s not promising for the future of those properties. The lack of a reopening plan could bring back rumors that one or all of the four properties could be sold in the future.
Between the Tropicana and various Station Casinos properties, there could be room for new casino operators in Las Vegas. On top of this, Caesars is still planning to sell at least one of its Vegas Strip properties in the next 12 to 18 months.
Strap in, the next couple of years in Vegas is going to be a wild ride!