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It seems that every holiday or major event brings a deluge of headlines from Las Vegas local media about lofty expected visitation figures, often an increase over the previous year. On the surface, it seems that visitors are flocking to Vegas in droves bigger than ever before. Good, right? Not so fast.
Lost in the shuffle of event visitation headlines and record airport traffic is the macro picture: Las Vegas visitation has been flat, even declining, since reaching a peak in 2016.
What makes the trend more concerning is the state of the economy. The stock market is regularly hitting all time highs, home values have fully recovered from the great recession, and unemployment is at historic lows. Shouldn’t business in Las Vegas be booming? Simply put, it isn’t, and it’s troublesome.
Below is a graph detailing the visitation trend per visitation statistics provided by the Las Vegas Convention and Visitor’s authority (LVCVA). Note the peak in 2016 and the subsequent loss of momentum. Growth has disappeared in the best economy of many of our lifetimes.
Adding to the concern, thousands of new hotel rooms will be coming online in the near future at Resorts World (3,500 rooms), Circa (777 rooms), Downtown Grand (495 rooms), and potentially The Drew (4,000 rooms) assuming the project gains momentum. How will Las Vegas hotels maintain occupancy at room rates that aren’t heavily discounted?
The question everyone should be asking: If visitation is slumping now, what happens when the next recession hits?
We feel the reason for visitor growth deterioration can be attributed to a decline in the destination’s perceived value combined with the increasing prevalance of gaming options nationwide.
While Vegas, when compared to other major tourist destinations remains a strong value in our opinion, the proliferation of fees on nearly every transaction are ruining the city’s perception of value. Guests now regularly pay parking and resort fees at the hotel. Additionally, some restaurants are charging concessions and franchise (CNF) fees, a percentage fee tacked onto guest checks for no apparent reason. Concert and event tickets seem to double in price after all applicable service, venue, and other miscellaneous fees are tacked on. To put it simply, although Vegas as a destination is comparatively cheap, it no longer FEELS that way to many and guests are voting with their wallets.
It’s clear that resort chains have shifted their strategy to target business and convention travelers who are less averse to fees as those expenses are typically reimbursed by their employers. Who knows, the strategy may even pay off with additional convention space being added across the city. Current projects underway include Caesars Forum, Las Vegas Convention Center expansion, and the Wynn Convention projects.
Alienated in this strategy though is the leisure traveler, who is becoming fed up. Spend a mere 10 minutes on any Las Vegas focused social media group and you’ll realize quickly that long time visitors have strong negative feelings about new fees and perceived corporate greed.
Which leads us to gaming commoditization. The days of Vegas having a gaming monopoly are over. There is competition nationwide and they are providing a similar, if not identical experience, that Vegas resorts do. If visitors no longer feel Vegas delivers value, they’ll choose to stay close to home. Why travel cross country when you can get an equal experience an hour from where you live? Hell, the local joint may even allow you to park your car for free.
It’s time to wake up. We want our resorts, restaurants, and entertainment options to thrive. We also want them to stop alienating visitors with value perception muddling fees. Transparency in pricing, re-introduction of player friendly games, and making customers feel valued will go a long way in growing the pie for everyone.