Economists predict recovery for Las Vegas

Two economists told Las Vegas business leaders Wednesday that with the arrival of coronavirus vaccines Southern Nevada should help with an economic recovery by the third quarter of 2021 and that the gaming industry should rebound closer to normal in 2022.

That was the message from Chris Thornberg, founding partner of Southern California-based Beacon Economics and Stephen Miller, a UNLV economist and director of its Center for Economic and Business Research.

The comments from the duo today at a virtual conference hosted by Las Vegas Global Economic Alliance mirrors ones made earlier this week by Wynn Resorts CEO Matt Maddox who spoke virtually to Peter Guzman, president of the Las Vegas Latin Chamber of Commerce.

“I really feel that by the summer, which seems like a long ways away but it’s not, we will be back,” Maddox said. “Conventions won’t be back. Business travel takes forever. Vaccines will be rolled out. Testing will be widespread. People will be ready to be back with other people. We will start to feel that momentum in February and March coming out of the winter. Between now and then, it’s bucking broncos.”

Wynn Resorts learned from the lockdown in China with their properties there, that once it’s over people enjoy going out and being around other people. It’s going to be electric, he said.

“I think it’s going to be the same after the Roaring Twenties after 1918 and 1919 (Spanish flu pandemic),” Maddox said. “You went into Great Gatsby. It was ‘oh my God. We survived this. Let’s have fun.’”

Federal officials said COVID-19 vaccines will be rolled out to health care workers this month and that most of the general public should be vaccinated in April and May.

“We can now see the end in sight because of the vaccines,” Miller said. “If the distribution and inoculation is such that people take it at a high enough level, we could see the end of the pandemic by maybe the middle of 2021 and certainly by the end of 2021 if everything goes smoothly. That means 2022 should be a good year.”

Miller projects Las Vegas visitor volume will end 2020 down 51%, but doesn’t expect to gain it all back in 2021 with a 54% increase from the decline. It will grow another 10% in 2022. Hotel occupancy will end 2020 down 40% and rebound 30% in 2021 and another 8% in 2022, Miller said.

Gross gaming revenue will end 2020 down 36.4% in Southern Nevada and grow 31.3% in 2021 and another 11% in 2022, he said.

Thornberg said sectors such as hotel, restaurants and transportation can’t recover until the virus is under control.

“I’m hearing that almost 60 million doses available here in the United States by January and by March and April that a phenomenal number of people will have this,” Thornberg said. “We don’t have to have herd immunity to have control over this thing. My guess is by the second quarter of next year a lot of this will be in the rear-view mirror.”

Thornberg said while there’s been some bounce back in hotel occupancy and visitation during the third quarter, there’s a way to go. Because of the 2020 federal stimulus, Thornberg said people have saved a lot of money during the pandemic because they didn’t have many options for spending it. That bodes well for the recovery of the casino resort industry that will lag behind other sectors. It won’t be like the aftermath of the Great Recession when people lost a lot of household wealth, he said.

“This is the rocket fuel that will get our economy back to normal very quickly in 2021,” Thornberg said. “There’s a lot of conversation about a new normal and that people will never go back to ball games and casinos. No. This is not a new normal. Pandemics have been with humanity since the dawn of time. I understand that global tourism is going to be a little slower to recover, but there’s no evidence that when pandemics leave that people substantially change their behavior.

“We still have a long way to go, but I know 2021 will be a brighter time for our economy. It was a realization that we’re getting back to normal, and by 2022 Vegas is going to be back to pretty much where it was before the pandemic with hotel rooms and visitors and great things Las Vegas has to offer.”

Maddox said he’s still trying to anticipate how “do we get Las Vegas back. Las Vegas is built around mass gatherings. It’s not built around casinos. Casinos are great. It’s built around shows, entertainment, conventions and nightclubs.”

Maddox said Wynn is building a lab that will be finished in 30 days that will process between 6,000 and 8,000 COVID-19 tests in a six-hour period and tests that are 98 to 99% accurate. People want to feel safe, he said.

“Until this is gone, herd immunity or massive vaccinations, that will make people feel more comfortable getting into a space knowing everybody in that room has tested negative in the last six hours, or has been vaccinated,” Maddox said.

The Wynn Resorts CEO said he expects there to be a significant spread of the coronavirus in December, echoing what health experts across the country are saying because of the Thanksgiving holiday gatherings. He said he doesn’t know if there will be any additional closures of Nevada casinos as occurred earlier this year but expects more restrictions and “significantly less people over the next two months.”

Last week, Nevada Gov. Steve Sisolak limited occupancy on casino floors from 50% to 25%.

Maddox said since conventions will take longer to come back, Las Vegas has to be smarter about attracting more leisure customers to come and have fun because people will want to get out and have a good time.

“Having the Raiders, having T-Mobile (Arena) and we’re working on new shows, we can make up for not all but a lot of that business and Las Vegas can establish itself as the place to go again quickly to let loose and get together with friends,” Maddox said. “It’s what we’ve always been, but that will be our immediate future and something we can lean into to get us going again and lots of people hired again. My long-term view is Las Vegas is in a very good position. It will take a couple of years, but the future is quite bright.”

Guzman echoed that. Las Vegas now has sports teams to go with entertainment and knows how to put on a party, he told Maddox.

“I know this is a tough moment right now, but I want folks to know it’s going to be huge,” Guzman said.

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