Half a year into the coronavirus pandemic, the Las Vegas Strip has a problem, while regional casinos have rebounded and are picking up slack, according to a recent research report from Fitch Ratings.
The Strip’s reliance on inbound visitation, air capacity and conventions will result in a slower recovery through 2024, according to the report. Air capacity is still about 60 percent of normalized levels, and visitation is even lower. While gaming declines are less severe, about two-thirds of the Strip’s revenues are non-gaming and will require a rebound in tourism and conventions. Recent easing of group restrictions is a positive, but Fitch does not envision a material increase in convention attendance or broader air capacity until a health solution is present.
Meanwhile, regional casinos have rebounded since reopenings started in May 2020, according to Fitch. August 2020 regional gaming revenues were down 16 percent year-over-year, excluding New York, and Fitch is assuming a 10 percent decline in 2021 relative to 2019. Operators reported significant margin expansions after the reopenings due to lower promotional and amenity expenses. However, Fitch expects margins to normalize as the recovery progresses.
In addition, Fitch found New Jersey and Pennsylvania online gaming revenues remain at elevated levels subsequent to reopenings, suggesting some land-based gaming may have permanently migrated to online.
A copy of the report, entitled “What Investors Want to Know: U.S. Gaming—Half a Year into the Pandemic” is available at www.fitchratings.com.