“It’s been a long December but there’s reason to believe maybe this year will be better than the last…”
One thing to look forward to in March is the official end of winter, at least for large swatches of the U.S. I seriously doubt that a date in the calendar means the end to frigid weather in the upper Midwest, Alaska, Maine and other points north.
I bet this is the same feeling some segments of the gaming industry still harbor when it comes to economic recovery from the recent recession—while many parts of the industry bask in the light of incrementally growing attendance and revenue, others are still mired in the icy-lock of dropping visitation and underperforming monetary results.
Still, there are some casino bellwethers that are finally tolling and may single better economic days ahead for the domestic gaming industry as a whole. A recent report from equity research firm Union Gaming suggest the Las Vegas Strip—poster child for many of the vicissitudes that plagued the gaming industry and likely slowed its recovery—is once again on the rise.
The paraphrase the report, which looked at 2015 Strip indictors in an attempt to determine 2016 performance, while the Strip still lags slightly from its gaming peak years in 2007 and 2008, food & beverage and hotel revenues have more than recovered, continue to grow and will make up for the continued softness in the casino portion of Strip enterprises, especially as visitor volume to Las Vegas increases.
“Visitation and average spend continue to rise,” the report states. “Further, infrastructure developments such as the Las Vegas Arena and airport improvements are an important part of this. In addition, operators have made considerable reinvestment into existing assets over the last eight years, re-positioning assets to better appeal to current customer preferences. This is especially noticeable at Caesars and MGM Resorts.”
Indeed, recovery is to the point where Union Gaming believes the market can now support all the new supply expected to come online through 2018. This includes some pretty massive projects, such as $4 billion Resorts World Las Vegas Forbidden City-themed resort, which is reported to feature a 175,000-square-foot casino, aquarium, panda exhibit, an indoor water park as well as a replica of the Great Wall of China and is slated to open in mid-2018.
So, just how good does the future look for the Strip? “We forecast gross revenue from major operators on the main resort corridor of the Las Vegas Strip to grow about 5 percent per year for the next three years, barring any unforeseen macroeconomic or geopolitical shock,” the report said. “At this 5 percent growth trajectory, we estimate that total gross revenue on the Las Vegas Strip will total $18.1 billion by 2018, up from $15.9 billion today.”
Sure, what happens in far flung Las Vegas may not directly impact what’s going on many regional gaming markets across the land, but a healthy and growing Las Vegas Strip will hopefully have enough steam to eventually lift all boats, especially if it ignites the public’s dormant love affair with audacious casino developments and gets people thinking about visiting brick-and-mortar casinos on a regular basis again.
Sure, this is a bit of a sunny outlook given the current customer growth issues facing the industry; but’s what’s wrong with contemplating brighter days ahead on an otherwise cold winter’s evening?