Caesars, MGM, Wynn, and the rest of the big Las Vegas casino operators appear to finally have turned the corner after the covid pandemic..
Las Vegas had a bleak 2020 with the pandemic forcing Sin City to close. Caesars (CZR) – Get Caesars Entertainment Inc Report, MGM Resorts International (MGM) – Get MGM Resorts International Report, Wynn (WYNN) – Get Wynn Resorts, Limited Report, and the rest of the players on the famed Las Vegas Strip literally had to shut down their massive operations, and, when they reopened tourists did not flood back in.
In August 2021, temperatures neared 110 degrees and Las Vegas practically shimmered in the sunlight. Las Vegas Boulevard wasn’t completely devoid of people, but the homeless seemed to outnumber tourists and it felt a bit like a world post-zombie apocalypse.
Not every casino had opened its doors, and some that were open lacked any paying customers. It was a bleak time for Caesars and MGM, which had returned many of their properties to operating status only to see conventions canceled and tourists stay away due to mask mandates, social distancing, and other covid-related rules.
Things weren’t that much different in early January 2022 when a very muted Consumer Electronics Show (CES) took place. That’s an event that usually brings nearly 200,000 people to Las Vegas, packing hotels and sending room rates skyrocketing.
Instead, only about 30,000 people showed up, hotels were well under 50% capacity and the city felt eerily empty. Just a few months later, however, March Madness and the end of mask mandates have led to a Las Vegas revival. Now, as Sin City heads to spring, the crowds have returned and Caesars, MGM, and Wynn investors can celebrate some major catalysts. That should drive business higher.
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Las Vegas Welcomes a Return to Normal
The former Oakland Raiders became the Las Vegas Raiders in 2020, during the worst of the pandemic. That meant limited crowds and none of the party atmosphere that made Las Vegas a desired destination. That changed during the 2021 season at the stadium which was packed, but the city’s crowds still lagged. Now, the NFL will lead the Las Vegas comeback as the league’s draft will take over The Strip for three days to close out April.
That event, which airs on Walt Disney’s (DIS) – Get Walt Disney Company Report ESPN and ABC, will show off that Vegas has returned to its former glory as the party capital of the world. The draft, along with four shows from K-Pop sensation BTS, and a major trade show, the National Association of Broadcasters (NAB) show, have seen April hotel room rates move four to five times higher than they were in 2021, according to the Las Vegas Review-Journal.
“The numbers didn’t surprise me that much because we’ve got good events that will fill the destination, which means you can command a higher room rate and you’re going to get a higher room rate because as the capacity increases, the rate increases,” industry analyst Brendan Bussmann, founder of Las Vegas-based B Global, told the paper.
“There are a lot of factors that go into it, but it’s no different than New Year’s Eve having high rates or CES or anything else,” he added. “It’ll be interesting to see how much ADR (average daily rate) is impacted when first-quarter earnings results come out, solely because CES had such low rates this year.”
It took a few more months than many expected, but Las Vegas, Caesars, MGM, and Wynn appear to be back.
What It’s Like in Las Vegas Right Now
In August 2021 with temperatures soaring, Las Vegas felt empty and the city just smelled stale rather than offering the rather fragrant marijuana smell that tends to dominate The Strip. Now, Las Vegas Boulevard doesn’t feel as crowded as it can be during a peak Vegas weekend, but a few weeks ahead of the draft, during a slow week post-March Madness, pre-NBA, and NHL playoffs, the city feels alive (and, yes, The Strip smells like pot).
And, as the month moves on, hotel prices have moved from an average of around $100 per night in 2021 to over $400 per night during the BTS shows, NAB, and the NFL draft.
“When hotels set their prices, they use what we call demand-based pricing,” Amanda Belarmino, an assistant professor at UNLV’s William F. Harrah College of Hospitality told the Review-Journal. “This means that the rates fluctuate based on what is going on at the property or in town. For most hotels, they set an initial price 6-12 months before arrival and then make changes based upon booking.”
Las Vegas casinos, however, heavily comp rooms to frequent gamblers (and both Caesars and MGM have continued to be aggressive in sending free room offers to even mid-tier/moderate gamblers). You can be sure, however, that the big casino operators know their business and that even “free” rooms come with a price as customers fill up restaurants, casinos, and pay hundreds for BTS, Adele, Sting, Zedd, and other headline acts booked this spring.
They say in Las Vegas that the house never loses. That wasn’t true during the covid pandemic, but Caesars, MGM, and Wynn appear to have put together a winning hand.
