Downtown Prospers while Strip Stumbles

The economy is booming, were in the midst of a historic bull market and businesses across the country are benefiting from increased consumer confidence. In a peculiar twist however, Las Vegas Strip casino operators aren’t feeling the love. As of market close on September 21st 2018, Caesars Entertainment’s stock has dropped -15.29% over the past 52 weeks. MGM Resorts, another company with a major strip presence has fallen -13.75% during that same period.  Why are companies with a major strip footprint falling while the broader market, nearly everything, has been on an upswing?

While performance of properties in Macau (facing trade war headwinds and a Chinese corruption crackdown) have a major impact on MGM Resorts, Wynn and Las Vegas Sands, concern over softening demand on the Las Vegas Strip lingers. 

Not all of Las Vegas is suffering from a lack of demand however. Downtown Las Vegas is enjoying increases in hotel occupancy and gaming win that would be expected with a booming US economy.   

Shares of Boyd Gaming, a regional gaming company, owners of Main Street Station, Fremont and California downtown, have traded up 38% over the same 52-week period that saw Strip operators drop. It is important to note that Boyd has a much larger footprint than just Fremont Street. They also own a number of Vegas properties off the beaten path in addition to regional casinos across the US. 

Some of the stats below compare the Las Vegas Strip’s recent performance to Fremont Street: 

  • Las Vegas Strip Occupancy was down .5% in 2017 compared to 2016 while occupancy downtown was up .3%. (Source: LVCA).
  • Gaming revenue on the Strip was up a meager 1.3% in 2017 vs 2016 while downtown’s gaming win increased by 11.8% year over year (Source: LVCA).
  • Per LVCA visitor profile surveys, more and more people are making a point of visiting downtown. While only 30% of travelers visited in 2013, 57% made the trip downtown in 2017 (Source: LVCA).
  • Per LVCA Visitor profile surveys, 77% of Vegas visitors staying overnight booked a room on the Strip in 2013. That percentage has dropped to 73% in 2017. Meanwhile the percentage of overnight visitors that book a room downtown is holding strong at 5% over that same time frame. Downtown has seen no deterioration (Source: LVCA).
  • Per LVCA visitor profile surveys, 89% of Vegas visitors gambled on the Strip in 2017 vs. 88% in 2013 (Source: LVCA).
  • On the other hand, while only 29% of visitors gambled downtown in 2013 that number has shot up to 40% in 2017 (Source: LVCA). More people are making downtown a priority.

Why are more travelers making downtown a priority to visit and gamble? Is there a reason that hotel and gaming demand on the strip is soft while downtown holds strong? It boils down to Las Vegas Visitors desire to find value. Resort Fees and parking are more manageable downtown, gambling limits are more accommodating and you can find a cheap, satisfying meal.  It doesn’t hurt that quality, non-gaming attractions like the Mob and Neon Museums draw additional traffic away from the Strip. 

In this blog’s opinion, Downtown Las Vegas’ bull run is just beginning. Derek Stevens, who has already revitalized the D and Golden Gate casinos and has set his sights on the former Las Vegas Club site where construction on a new, 777 room hotel and casino will begin soon.

Additionally, the Fremont Street Experience Viva Vision canopy screen is getting a $32 million upgrade which will increase picture/sound quality while allowing for 24-hour operation.

According to Vital Vegas’ Twitter account which routinely provides fresh, delicious, Las Vegas scoops the Fremont Hotel and Casino is planning a new 500 room hotel tower which has yet to be officially announced by Boyd Gaming.

As long as downtown Las Vegas can maintain a strong perception of value, we think the positive business momentum that has been demonstrated won’t slow anytime soon, it’s just getting started.

 

See Also: Are the slots down town looser and more likely to pay out than those on the Strip? Yes. Check out our piece on where to find loose slots in Vegas here!

Share This Article!

4 thoughts on “Downtown Prospers while Strip Stumbles”

  1. The strip resort fees are ridiculous enough. Now MGM charges for parking. DT casinos jumped on the resort fee bandwagon other then the Four Queen’s . The most ludicrous is Primm Valley casinos charging a fee . The pool is ice cold even in the summer and the rooms are dirty and neglected.

Leave a Reply

Your email address will not be published.