Las Vegas Gaming Revenue Poised to Slump in 2023, Says Fitch
Posted on: August 12, 2022, 06:13h.
Last updated on: August 12, 2022, 06:46h.
Led by Las Vegas, the US casino industry is on a record-shattering pace of revenue generation this year. But Sin City gaming revenue could retreat in 2023.
Citing the possibility of a broader economic retrenchment, Fitch Ratings says Sin City gaming revenue will decline 10% next year. That’s before low single-digit percentage growth in 2024. The research firm points out even if Las Vegas casino and room sales fall next year, the declines won’t be nearly as bad as those experienced during the global financial crisis in 2008-09.
We expect a more moderate downturn relative to prior gaming cycles, helped in part by still-healthy employment rates, broader resiliency in post-pandemic leisure travel, and the ongoing recovery in convention business,” according to Fitch.
The credit ratings agency adds that upcoming gaming levels, revenue per available room (RevPAR) and non-group visitation data could point to retrenchment in leisure demand. However, that assessment comes against the backdrop of the domestic casino industry generating a record $14.81 billion in revenue in the second quarter.
Las Vegas Convention Recovery Essential
An earnest rebound in convention and meetings business could provide some buffer against 2023 leisure sales declines in Las Vegas. It could also provide a runway for growth the following year.
Consensus in the analyst community is that 2023 will mark a true rebound in Las Vegas’s meeting and convention business.
Some Sin City venues have massive amounts of convention square footage that hasn’t earnestly been put to use because of the coronavirus crisis. For example, Caesars Entertainment and Wynn Resorts both have substantial convention space that has yet to be tapped, owing to the pandemic.
“We expect healthy group business demand growth in 2023, supported by a more normalized convention calendar and easy comparisons to the prior year,” notes Fitch. “Forward-booking calendars for Las Vegas Strip operators are generally healthy for next year and beyond, supported by events that were postponed during the pandemic. However, group event attendance could weaken if corporations tighten spending as the economy weakens.”
Through May, Las Vegas convention attendance was 67% of pre-pandemic levels.
Other Las Vegas Revenue Drivers
Completion of new projects, including the Dream Hotel, Fountainbleu, and Hard Rock’s enhancement of the Mirage will bring fresh guestroom supply to Las Vegas over the next several years. Room supply in the largest domestic casino center should increase by 2% to 4% through the middle of the current decade. That is in-line with historical trends.
Fitch also highlights the city’s status as a booming sports destination as a potential driver of increased visitation, which would clearly benefit casino operators.
“Growth in professional sports has broadened the strong base of entertainment options in Las Vegas. The Raiders NFL franchise and related Allegiant Stadium have supported visitation, and will likely attract other major sporting events/franchises to the market. Formula 1 added Las Vegas to its circuit for 2023, and high-profile events like the Super Bowl and NCAA March Madness are also scheduled in the medium term,” concludes the research firm.
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