Casinos Feel Brunt of Hotel Industry ‘Collapse’ Caused by COVID-19

Posted on: September 2, 2020, 12:08h. 

Last updated on: September 2, 2020, 03:06h.

The hotel industry is “on the brink of collapse,” according to a new report — and casinos are experiencing the brunt of this fallout from the coronavirus pandemic.

United Airlines To Furlough Workers
Low tourist travel figures are contributing to distress in the hotel and casino industries. United Airlines announced Sept. 2 it will furlough 16,370 workers next month. (Image: USA Today)

With COVID-19 bringing “a virtual halt to the country” since March and April, the hotel industry is among the first to suffer, according to a report Aug. 31 by the American Hotel and Lodging Association (AHLA).

“Unfortunately, it will also be one of the last to recover,” the report states.

This slowdown already is having an impact on hotel-casinos, with job losses mounting. MGM Resorts announced it has laid off 18,000 employees this week from its properties across the country. The layoffs include workers in Nevada, Michigan, New Jersey, New York, and elsewhere.

Hotel rooms are going unoccupied in many places. In the Las Vegas area, the total hotel occupancy rate, including downtown and the Las Vegas Strip, was down 48.6 percent in July. That’s according to the latest figures available from the Las Vegas Convention and Visitors Authority.

The hotel association report states that nearly nine in 10 hotels nationwide laid off or furloughed workers at the pandemic’s height this spring. Four in 10 hotel workers nationally still are without a job.

Travel Halt

One problem hampering the industry is that travel has plummeted to an all-time low, according to the report.

Only 33 percent of Americans say they have traveled overnight for leisure or vacation since March, and only 38 percent say they are likely to do so by the end of the year,” the report states. This leaves the hotel industry “on the brink of collapse.”

In Nevada, the drop off has shown up in travel numbers. Last week, McCarran International Airport issued its latest travel figures. Statistics show that while passenger totals exceeded 1.6 million in July, that number is down 64 percent from the previous July’s 4.5 million passengers.

But tourism officials see optimism in the number of flights that have come into Las Vegas since casinos reopened June 4. At one point in the spring, only 110 flights a day were arriving in Las Vegas. By July, that number was up to 280 arrivals each day.

Even so, the effect on the airline industry overall has been painful. On Wednesday, United Airlines said it planned to furlough 16,370 workers on Oct. 1.

Weather Woes

In addition to the pandemic this year, the casino industry felt the wrath of one of the worst hurricanes ever along the Gulf Coast.

Hurricane Laura, a powerful Category 4 storm with winds up to 150 mph, battered casinos in Louisiana, disabling four in the Lake Charles area for an undetermined period. One floating casino, the Isle of Capri, came unmoored and struck a bridge, requiring a tugboat to return it to its original location.

However, a Louisiana State Police spokesman told that damages to the Isle of Capri, a Caesars Entertainment property, could take nine months to repair.

Bad weather still could be a challenge for casinos going into the fall. According to The Weather Channel, 75 percent of hurricane season, which peaks in September, is yet to come.

Encouraging Signs

Across the country, not all weather is stormy for the casino industry. In New York, Gov. Andrew Cuomo (D) announced he will have “positive” news for casinos in the Empire State this week.

He has not set a date for when he will allow casinos to reopen, but his recent remark was greeted in the industry as an encouraging sign.

Statewide in New York, hotel-casinos and video-only venues, such as racetracks, employ a combined 10,000 workers. These employees have been without a gaming job since Cuomo ordered casinos and other “nonessential” businesses to close in mid-March as COVID-19 deaths surged across the state.

Elsewhere, construction is also continuing in the casino industry. In Las Vegas, the $1 billion Circa Resort is nearing completion. The casino portion of the property is expected to open in October, with hotel rooms available for occupancy by the end of the year.

Located at the western end of Fremont Street, the Circa is the first new hotel-casino built in downtown Las Vegas in 40 years. It has been hailed as an important element in reviving the downtown area.