Posted: Jul 14, 2021 at 12:24 pm
Last updated: July 14, 2021, 3:16 am.
The Las Vegas Strip’s recovery from the coronavirus pandemic is coming together faster than analysts and experts predict. This launches the largest domestic casino hub on the way to earning gambling revenue ahead of the pandemic sooner than expected.
A group of young people take a selfie with a selfie stick on the Las Vegas Strip last New Year’s Eve. The Casino Center has seen strong demand this year. (Image: Associated Press)
In a recent release, Fitch Ratings said strong demand from US customers is propping up the strip casinos while business with international customers remains subdued. The heavy domestic traffic is enough for the research firm to estimate that Sin City will return to 2019 levels in 2023, up from previously forecast 2024.
We have revised our Las Vegas Strip recovery assumptions to reflect a full return to pre-pandemic revenue by 2023 instead of 2024. “ said Fitch.
“Revenue is now expected to decline approximately 20 percent and 6 percent, respectively, from 2019 in 2021 and 2022, compared to our previous forecast that revenue will decrease by 50 percent and 2022, respectively.
The pace of recreation on the Las Vegas Strip is picking up pace. (Image: Fitch Reviews)
The research firm highlights Americans’ increasing demand for recreational games as one of the catalysts for its optimistic outlook for Sin City. It does acknowledge, however, that “the slowdown in domestic vaccination and uncertainty about virus variants” are issues worth monitoring.
Viva Las Vegas even without congress business
While the enthusiasm for recreation is palpable in Las Vegas, it is currently based on consumer demand as convention traffic remains low.
Earlier this year, executives from several strip operators said weekend bookings at their integrated resorts were close to 100 percent by the end of 2021.
However, Sunday through Wednesday traffic remains in doubt due to the lack of convention and convention activities. The prevailing view now is that business traffic will pick up somewhat later this year, with a more marked recovery in 2022. Even at this slow pace, the data shows that vacationers are doing a lot of hard work.
“The decline in slot machines fully recovered to 2019 levels in March and was 23 percent higher in May,” said Fitch. “The drop in table games, which for Baccarat is somewhat dependent on international visits, fell by only 14 percent in May. Hotel revenue per available room (RevPAR) on the Las Vegas Strip declined 55 percent, 40 percent and 30 percent, respectively, in March, April and May, aiding the gradual recovery. “
Individual operator instructions
Some strip operators are optimistic about convention trends, noting that bookings look solid in the second half of 2021 and 2022. Wynn Resorts (NASDAQ: WYNN) recently began a room renovation worth $ 175 million in response to strong bookings in 2022. That’s an optimistic sign considering Macau is a far bigger market for this company.
Other operators, including MGM Resorts International (NYSE: MGM), point out impressive ones Earnings before interest, taxes, depreciation, amortization and restructuring or rental costs (EBITDAR) margin trends.
“MGM Resorts, for example, reported an EBITDAR margin of 20 percent in the first quarter of 2021, compared to a high EBITDAR margin of 20 percent before the pandemic and expected further margin growth over the course of the year,” said Fitch.
The research firm has a “negative” outlook on MGM’s “BB-” credit rating and notes that Las Vegas Sands (NYSE: LVS) must see further recovery in international markets before positive changes in credit ratings and credit ratings. prospects can be considered.
