A resurgence of new COVID-19 cases is dealing a fresh blow to Las Vegas casinos by driving business away from Sin City and toward regional locations.
Daily new COVID-19 case counts in the U.S. surged to a record high 57,209 last week as several states, including Nevada, saw infections reach a new peak. While daily deaths hold near their lowest levels since March, the uptick in cases has generated concerns that Las Vegas casinos could reclose their doors or slow reopening plans. Another consequence could be the hesitance of consumers to travel. Such outcomes would be detrimental to the recovery in destination markets like Las Vegas. The Nevada Gaming Control Board did not respond to FOX Business' request for comment.
“We still don't have full supply open yet on the Strip,” Barry Jonas, New York-based analyst at SunTrust Robinson Humphrey, told FOX Business.
“Timelines keep shifting, but our expectation is that it's going to be pushed out further,” he added. “It's going to be a long time for that destination market to improve, and every uptick in cases around the country is a step backwards.”
Stay-at-home orders aimed at containing the spread of COVID-19 shuttered Las Vegas casinos for the first time since former President John F. Kennedy’s assassination in 1963. The shutdowns, which lasted nearly three months resulted in a $4 billion hit to casino revenues and have caused the value of the S&P 500 Casino & Gaming Index, comprised of Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts, to shrink by 41 percent this year to $22.4 billion, according to Dow Jones Market Data.
|LVS||LAS VEGAS SANDS CORP.||38.77||+0.07||+0.18%|
|MGM||MGM RESORTS INTERNATIONAL||42.85||-0.04||-0.09%|
|WYNN||WYNN RESORTS LTD.||88.59||+0.42||+0.48%|
The reopening, which began in June, has been somewhat of a mixed bag. Weekdays have been slow without group business while weekends are outperforming low expectations, Jonas said, citing sources on the ground.
Anecdotal evidence suggested that in the early days of reopening, casinos that were laxer on the enforcement of mask wearing were seeing a stronger bounce back in business.
“In the first few days there weren't that many people wearing masks, but I think what you've seen, particularly in the last week and a half, wearing masks obviously is a regulation now in Nevada, but it's not an issue,” Derek Stevens, CEO of D Las Vegas Casino, told FOX Business on July 2. “People are now figuring out a way to have fun and be safe at the same time.”
While customers are figuring out how to enjoy the Las Vegas experience in the age of mask wearing and social distancing, a continued increase in COVID-19 case counts elsewhere could also impact business due to Sin City’s stature as a destination market.
Southern California, which accounted for 19 percent of visitors in 2018, according to the Las Vegas Convention and Visitors Authority, has recently seen a big jump in cases, causing California Gov. Gavin Newsome, a Democrat, to consider new lockdowns. Meanwhile, other parts of the country, like Texas and Florida, have paused their reopenings amid a swell of new infections. All of that feeds into virus fears and makes people more hesitant to travel.
While coronavirus concerns have shuttered some regional casinos, Jonas believes the current environment favors locations that are within driving distance from patrons’ homes, like Penn National Gaming, Monarch Casino & Resort Inc. and Twin River Worldwide Holdings.
|PENN||PENN NATIONAL GAMING INC.||52.86||-0.08||-0.15%|
|MCRI||MONARCH CASINO & RESORT INC.||70.23||-1.14||-1.60%|
“These properties will limit the amount of people who could come in and limit the amount of slot machines, table games,” Jonas said.
“But you're really dealing with your VIP players, those 20 percent of players who make up 80 percent of the revenues,” he added. “They're coming back. They're spending more and they're a little more risk-tolerant."