Posted on: March 29, 2023, 04:13h.
Last updated on: March 29, 2023, 04:25h.
Perhaps surprisingly, multidecade high inflation hasn’t materially affected the US gaming industry, but data confirm guests are dialing back expenditures previously allocated to amenities such as fancy restaurants, nightclubs, and poolside cabanas.
Though that trend is clearly “Las Vegas related,” it’s happening across the US, according to SevenRooms, a provider of reservation management analytics to the hotel and dining industries. The data also confirm trends some Las Vegas gaming executives highlighted last year, noting some customers are reining in spending on high-end dining and impulse spending, such as drinks or extra pulls on slot machines.
Some operators are seeing signs of reduced spending among cost-conscious patrons, including in the Las Vegas local demographic. Likewise, regional casinos are among the contributors to the industry’s rebound from the coronavirus pandemic, but that sturdiness could be tested if gas prices spike during the summer months.
SevenRooms also noted that in February, no-shows at domestic hotels hit 5%, a 0.3% increase from January, while cancellations climbed 1.3% to 14.2%. That’s a sign travelers are comparison shopping, booking multiple rooms, and canceling reservations at other properties upon finding better deals, according to the research firm.
Why it Matters to Las Vegas
The SevenRooms data is meaningful to gaming industry analysts and observers because the firm counts MGM Resorts International — the largest operator on the Strip — Tao Group and Wynn Resorts among its clients.
On recent fourth-quarter earnings conference calls, casino operators signaled strength in terms of demand and hotel occupancy in the early innings of 2023. Data confirm as much, as Nevada’s streak of at least $1 billion in monthly gross gaming revenue (GGR) hit 24 months in February.
GGR measures exactly what it implies. It doesn’t gauge the other avenues through which bettors spend money at casino resorts, nor does it reflect potentially reduced expenditures on nightclubs, restaurants, and rooms.
In other positive news for the gaming industry, data pulled from Bank of America credit card spending trends indicates that in February, consumers spent more on services than on goods. If that reverses, gaming companies could be vulnerable.
On the Other Hand …
Las Vegas has avenues for resilience against inflation and altered consumer spending habits. For example, the city is expected to see a rebound in convention and meeting business, paving the way for a more material resurgence in 2024 and 2025.
Additionally, Sin City’s 2023 events calendar is arguably as attractive as it’s ever been. That includes the NCAA West Regionals, which wrapped up last weekend, and the November F1 race.
Other signs point to operators remaining confident in Vegas booking and spending trends. It’s just one example, but if Caesars Entertainment was worried about consumer demand and the like, adding 34 dates of Weekends With Adele at Caesars Palace probably wouldn’t have happened.