Will the whales return to Las Vegas as the U.S. travel ban ended November 8 for vaccinated travelers? A ‘whale’, of course, is a high-stakes gambler. But whales are only part of the promise of international travelers returning to the US after 600 days of the Trump/Biden travel ban.
With the U.S. travel ban ending for fully vaccinated travelers from more than 30 countries there has been considerable speculation about the potential economic impact. Lines of more than two hours were reported at US airports and border crossings as international travelers began to arrive.
Las Vegas will also benefit from tourists traveling to the gambling mecca, passing through as they explore the American West, and from international business people attending meetings and conventions.
In 2019, over 42 million people visited Las Vegas, the fifth year straight with more than 40 million visitors. That fell more than 50% in 2020, as just 19 million visited the city, due to the COVID-19 pandemic, the travel ban and an 80-day shutdown, including closure of the casinos. Of the 42 million visitors in 2019, about 5.7 million were international travelers, bringing an outsized economic impact of $4.8 billion to the city, according to the Las Vegas Convention and Visitors Authority (LVCVA). Almost all of that money disappeared during the 21-month international travel ban.
The return of international travelers will certainly have an impact on the workers and businesses of Las Vegas. One wedding planner, Joni Moss-Graham told a local TV station that about 90% of her wedding business was for international travelers. Even with the 21-month travel ban, 30 couples did not cancel, but only postponed their wedding plans, which are now upcoming. “We’re really excited!” she said.
So are international airlines, for whom Las Vegas is a lucrative destination. Virgin Atlantic cabin crew appeared in iconic US costumes including an NFL player and the Statue of Liberty, inspired by consumer research identifying what the UK loves most about travelling to the USA. A survey of over 2,000 British adults revealed that 40% of Brits have missed being able to visit the U.S. Bookings apparently followed, as Virgin claimed an initial 600% bump after the announcement on 20th September.
Juha Jarvinen, Chief Commercial Officer at Virgin Atlantic, said; “Our customers are ready to begin their US adventures, whether it’s to enjoy the magic of Orlando or to party the night away in Las Vegas.” Jarvinen added, “I’m delighted that our Orlando and Las Vegas services will begin on 8 November, the same day transatlantic travel reopens. We can’t wait to transport customers to our favorite destinations in the US safely once more.”
According to USA Today, when the first U.K. passengers arrived in Las Vegas, McCarran International Airport gave them a “fabulous Las Vegas welcome,” complete with waving showgirls. There were free T-shirts featuring the latest Las Vegas slogan, “What happens here, only happens here.” One London passenger, Karl Watson, 37, told USA he planned to spend his week in Nevada visiting national parks and seeing a Bryan Adams show. But his first stop after running the vaccination gauntlet, flying the Atlantic and across the U.S. and navigating customs? Surprisingly enough, a bar.
Asian, European, Canadian, Mexican and other international travelers can finally feel the green velvet of the gaming tables. Casino companies like MGM Resorts (MGM: NYSE), Caesars Entertainment (CZR: Nasdaq) and Wynn Resorts (WYNN: Nasdaq) will certainly benefit from the international onslaught.
The only question is how much such growth is already ‘baked in’ to the stock prices. It’s too early to answer yet, but signs are promising as Las Vegas continues its comeback after its traumatic shut down in 2020.
According to a recent research report by Luis Ricardo Chinchilla, a Research Analyst at Deutsche Bank, occupancy in Las Vegas was about 89% overall for Q3 2021, up from just 63% in Q1’21. Weekend occupancy was approximately 97% in Q3 and midweek occupancy was 86%.
Similarly a Deutsche analysis of a Wynn Resorts conference call noted Wynn noted October was the best month on record in Las Vegas, with the highest EBITDA and margins, despite holding below normal levels. Still, while occupancy may not have much room to grow, room rates and restaurant, retail and other sales always can.
Deutsche Bank added that while Caesars management said that the company began to see conventions return to Las Vegas in Q3, with the segment representing about 10% of occupied room nights. “Management anticipates a gradual recovery in the segment leading into next year, as group and convention revenues on the books for 2022 continue to pace nicely ahead of 2019. Demand for the Caesars Forum is exceeding the original underwriting expectations, with over 175 events booked currently representing 1.8 million room nights and over $650 million of revenues.”
MGM, which just announced that it would sell the operations of the fabled Mirage to a yet-unknown operator, had no comment for this story. However, in its recent earnings call, a spokesperson said that for the third quarter of 2021, “our Las Vegas Strip net revenues were $1.4 billion, just 8% below the third quarter of 2019.”
So will an anticipated flood of international visitors in 2022, starting with the 150,000 delegate CES tradeshow, pour unpreceded amounts of money into Las Vegas coffers?
A spokesperson for the LVCVA wrote, “We do not forecast and would not speculate as to how the return of international travel will affect visitation.”
However Steve Hill, president and CEO of the LVCVA, said when the Nov. 8 date was announced, “Today marks an important turning point in the recovery of international visitation essential to Las Vegas’ tourism industry. This milestone is also significant and welcome news for many of our major tradeshows and conventions that draw exhibitors and attendees from around the world. We are excited to welcome back our sorely missed international visitors.”