Is Las Vegas in Trouble?
Hotel occupancy rates are dwindling, declining tourism threatens to push Nevada's already nation-leading unemployment rate higher and casinos-once the beating heart of the Sin City economy-have extended a monthslong streak of falling revenue.
According to recent data from hotel analytics provider STR, hotel occupancy dropped to 66.7 percent in early July, down nearly 17 percent from the same period last year. Vegas also recorded the steepest national declines in average daily rate (ADR) and revenue per available room (RevPar), the latter down 29 percent year-over-year.
Data shows that visitors, both domestic and international, are increasingly steering clear of Vegas, sparked by a period of economic difficulty at home and a wider decline in inbound travel to the U.S.
Jeremy Aguero, senior analyst at the Las Vegas consulting firm Applied Analysis, described this as "a pretty formidable one-two punch" for a city so heavily reliant on flows of outside cash to keep its economy afloat.
"Southern Nevada is more dependent on the tourism industry than any other major market in the United States today," he said, adding that declining tourism is "having a ripple effect" throughout the city's flagship industry.
Gaming revenue across Nevada fell by 2.2 percent in May compared to a year earlier, according to the state's gambling regulator, with the Vegas Strip seeing an even larger drop of 3.87 percent.
Vegas's woes have been attributed in part to the high costs of visitation, with steep room rates, dining costs and pricy amenities deterring prospective visitors from spending their limited time and funds in Vegas.
"From what I understand, Vegas may be setting themselves up for the same situation they went through in 2008-2009," said veteran gaming consultant Bill Zender, "over pricing the market."
As well as dropping visitors, the city has also seen a significant exodus of its residents. According to Realtor.com's June housing report, Vegas has seen the largest increase in housing inventory, with active home listings now 77 percent higher than a year ago.
Robert Little, a real estate agent in Nevada, told Realtor.com that this was due to a marked slowdown in buyer demand, but also investors in the Vegas property market choosing to "cash out and reallocate their funds into other opportunities."
Aguero told Newsweek that one could view Vegas' struggles as a symbol for the economic issues facing all Americans, which have an outsized impact given the city's economy is centered around things – gambling, lavish hotels and a booming nightlife – that would be considered discretionary and the first to go in times of economic hardship.
"There are some folks that believe that Las Vegas has a tendency to be somewhat recession-resistant," he told Newsweek. "But no one ever has suggested that this community is sort of recession-proof."
"When you look at consumers across the United States, what you're going to see is that consumers are being stressed relative to the cost of living," he added.
A precarious national housing market, declining tourism, and heightened macroeconomic worries among America's spending population have spared few states or cities this year. Las Vegas's own weakening odds must be viewed against this backdrop, Aguero said, but added that these could nevertheless rebound in the near future.
This may require adapting pricing strategies to appeal to more cash-strapped visitors, acknowledging that casino gaming is no longer the revenue driver it once was, and expanding into sports and cultural attractions to meet the tastes of the modern American consumer.
"If there's one thing Las Vegas has proven since legalizing gambling in the early 1930s, it's that it is both resilient and resourceful, and it has both the infrastructure investments, but also the capability to reposition itself fairly effectively."
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