Las Vegas heavyweights are betting on a comeback

With a reopening of the Las Vegas Strip likely just around the corner, some of the market’s biggest casino-hotels are preparing to welcome back guests as soon as state restrictions on gaming operations are lifted.

Just how many travelers will be drawn to Las Vegas in the midst of the Covid-19 pandemic, however, remains to be seen.

“I wish I had a dollar every time someone mentions there being ‘pent-up demand,'” said David Schwartz, associate vice provost for faculty affairs at the University of Nevada, Las Vegas (UNLV). “But how do you really quantify that?
“Historically, Las Vegas revenue has tracked well when unemployment is low and consumer confidence is high. And both of those indicators are tracking in the opposite direction right now.”

Still, Las Vegas’ hospitality heavyweights are betting on a comeback, albeit a gradual one. After the Strip’s shutdown in mid-March, MGM Resorts said it could open select resorts — including its Bellagio and New York-New York casino-hotels — as soon as late May or early June, with Wynn Resorts also targeting a potential late-May reopening for its Wynn and Encore hotels. Likewise, Caesars Entertainment expects its Caesars Palace to be among the first properties it reopens as soon as Nevada’s governor gives the OK, while Las Vegas Sands Corp., which operates the Venetian and Palazzo, is reportedly eyeing a June reopening for its resorts.

In preparation, each of the four companies have released highly detailed health and safety plans. Protocols for the Wynn and Encore resorts, which were among the first Las Vegas casinos to unveil reopening guidelines, include thermal screening of guests and employees and the rearrangement of restaurant tables and slot machines to ensure physical distancing. 

At the Venetian, where roughly 25 emergency medical technicians will be available on site, guests will receive amenity kits featuring hand sanitizer, disinfecting wipes, gloves and a face mask. Caesars has pledged to limit table game spots and slot machines, while MGM is planning to install plexiglass barriers throughout its casinos and lobbies. 

Additionally, ramped-up Covid-19 testing could play a major role in Las Vegas’ rebound, according to Wynn Resorts CEO Matt Maddox. 

“Testing is continuing to be a real point of focus,” Maddox said during Wynn’s first-quarter earnings call on May 6. “We’re working with [the University Medical Center of Southern Nevada], so when we open at Wynn, any employee and any customer that wants the swab test can get it on-site.”

Steve Gallaway, managing partner for Global Market Advisors, a casino gaming, hospitality and sports betting consulting firm, said the vast majority of Las Vegas resorts “are doing a great job of putting their plans in place.”

“These are very large, sophisticated companies, and it’s not going to be a problem for them to keep spaces clean and safe,” Gallaway said. “They’re ready to hit that ‘go’ button. But I also think they’re being very realistic about expecting a slow ramp-up.”

Fly-in to drive-in

That ramp-up will likely be hindered by Las Vegas’ reliance on air travel, which has dropped sharply in the wake of the Covid-19 crisis. 

“If you go back to 1990, Las Vegas was much more of a drive market, but the proliferation of tribal gaming and other [regional gambling] options has cut into that,” explained UNLV’s Schwartz. “Resorts in Vegas have catered to a lot of fly-in customers, so they may have to make some changes to shift to more drive-in.”

That could mean resorts on the Strip might need to find ways to boost their local and regional appeal.

“Locals used to go to the Strip for dinner,” Gallaway said. “But nowadays, I don’t know any friends who dine there anymore. It’s just too expensive. In Vegas, you need to pay for parking, you need to pay a resort fee, and it’s $18 for a drink. For Vegas to come back successfully, they have to figure out how to give better value to their customers.”

Moreover, the hit to Las Vegas’ live entertainment, sports and convention businesses, which are expected to be among the market’s last segments to reopen in full, will certainly have a ripple effect on the city’s hospitality landscape.

“We have to think about how to drive visitation,” said Andre Carrier, COO of Eureka Casinos, which operates properties in Las Vegas and Mesquite, Nev., and in Seabrook, N.H. “People come to Vegas because they’re attending a conference or performance or sporting event. So we need new ways, for instance, to seat a stadium [in a socially distanced manner]. Is there software we can design to do that? And can it tell us what time people should enter and exit so we don’t overburden the entry and exit processes?”

To help solve these and other such challenges, UNLV’s Lee Business School and the Ted and Doris Lee Family Foundation have collaborated to launch the Lee School Prize for Innovation and Entrepreneurship, a competition in which a total of $1 million will be awarded to multiple entrepreneurs who develop solutions to address problems currently facing the hospitality, entertainment or travel industries.

Eureka Casinos’ Carrier is a founding member of the competition’s prize-steering committee. The platform began taking submissions this month.

“This challenge we’ve put out to the world is about building a bridge between our current moment and broad-based vaccination,” Carrier said. “We hope this prize will bring forward ideas and ways to crack the codes we need to crack.”

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