The visitor counts in Nevada have been on the increase for several months, and now there’s a brighter light at the end of the tunnel for the hard hit Silver State economy. Nevada gaming revenues saw statewide increase of more than 16% in May, the largest single month increase since 2006. The Las Vegas Strip did even better—their casinos enjoyed a whopping 28.9% increase during the month. These figures, along with additional data suggesting that positive trends in the number of tourists to Las Vegas are continuing, are further validating signs that the recession battered Nevada economy is on the mend—at least in terms of the state’s biggest industry.The Nevada Gaming Control Board reported on Monday that Nevada casinos collected $984 million from gamblers in May, compared to $847.1 million in May 2010. This statewide total single month revenue figure was the largest since September 2008. The month to month increase was the largest since December 2006.
Casinos on the Las Vegas Strip pocketed $580.4 million in gambling revenue during the month of May, compared with $450.2 million a year ago. The Strip’s percentage revenue increase was the largest since February 2010 (33%). As the state’s largest city and most important tourism market, the economic conditions in the Las Vegas market are often seen as a leading indicator not only for the gaming industry in the rest of the state but for the broader economy of ‘Sin City’.
There were some other hopeful signs that the Las Vegas tourism industry is starting to bounce back. The Las Vegas Convention and Visitors Authority reported a monthly increase in the number of visitors coming to Las Vegas—an increase of 3.3 percent to 3.37 million. The bulk of the increase was in recreational travelers, as the city’s convention business remains flat. On a macro level, there are any number of business trends suggesting that much convention travel may be a ‘dinosaur’ in the longterm as improved video conferencing and online collaboration platforms eliminate the urgency of travel. Las Vegas business leaders would be well served to transition into areas that can leverage the new realities of business rather than rely on an ‘old school’ convention and exhibit hall model that is on an inexorable path of decline.
Additionally,the overall hotel occupancy rate increased 3.5 percentage points to 86.1 percent. Additionally, the average nightly rate went up 9.7 percent $108.47 suggesting greater consumer demand. The overall inventory of hotel rooms declined slightly (eg: the closing of the Sahara) which also contributed to the tightening of the lodging marketplace.
The Convention and Visitors Authority also reported a statistic that has a degree of negative implications—vehicles coming from California crossing the state line at Primm, Nevada declined 4.2%. This is also a figure that, in our view, has less significance in the past. With the cost of air travel declining significantly and round trip flights priced at under $100 from Los Angeles to Las Vegas commonplace the trend of more and more travelers from Southern California opting to fly rather than drive is only going to increase. Anecdotally at least, the 5% increases in passenger counts at McCarren Airport serve to validate this view.
Every reporting area in the Clark County market experienced an increase in gaming revenue with the exception of Laughlin, which saw a decline of 10.6% during May. The Clark County gaming markets are broken down as follows: Las Vegas Strip, Downtown Las Vegas, North Las Vegas, Laughlin, Boulder Strip, Mesquite, and a grouping for the rest of Clark County not falling into the other statistical areas. Northern Nevada also didn’t experience the good fortune that most of Southern Nevada did—Washoe County (Reno and surrounding areas) saw a 6.6% drop in gaming revenues in May.
For the fiscal year 2011 which ended in June there was statewide increase of 3.3% from 2010. If the strong monthly tourist and gaming numbers continue to hold we can expect a substantial year to year jump in the fiscal 2012 numbers.
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