As Las Vegas recovers from pandemic decline, room rates are rising rapidly


It was bound to happen, but while there might inevitably be a clash, there will always be a sticker clash.

It’s here.

Las Vegas is getting more and more expensive, and it’s unclear how much more expensive a trip to Sin City will be in six months to a year.

To put the discussion into perspective, travelers should remember that Las Vegas has been through traumatic economic times. No region of the country has been hit harder economically by the COVID-19 pandemic than Las Vegas. Tourism was wiped out for a few months and unemployment soared. As a result, prices – especially hotel rates – have been depressed.

However, Vegas’ recovery is underway and it’s already showing in the amount visitors are willing to pay to experience the excitement of the city.

Record stretch for Vegas casinos

From a gambling perspective, the Vegas recovery has been underway since pandemic restrictions began to be lifted. In March, Nevada’s total gambling winnings — from casino slots and table games to online sports betting — hit a record 12th consecutive month of at least $1 billion. The previous record was eight consecutive months (October 2006-May 2007).

And the hospitality industry, which was hampered by a very depressed mid-week market because business groups were reluctant to travel as coronavirus cases surged (plus a general labor shortage) is starting to fidget. This is partly fueled by an explosion of major sporting and entertainment events.

The Las Vegas Convention and Visitor Authority’s most recent visitation report illustrates recent changes in room rates, using the pre-pandemic month of February 2019 as a comparative benchmark.

Increase in average daily room rates

The average daily rate (ADR) in February 2022 for Las Vegas (the Strip and downtown) was $149.52. In February 2021, with the city still struggling with COVID-19 restrictions, the ADR was $98.03, which by most comparisons was a bargain. For context, the pre-pandemic ADR for February 2019 was $130.06. This February 2022 ADR was actually slightly ahead of the February 2019 number, even after adjusting for inflation.

However, ADR becomes even more interesting when combined with room occupancy statistics.

In February 2019, the mixed occupancy rate (weekdays and weekends) was 87%. In February 2022, the mixed occupancy rate was 69.3%, a drop of nearly 18 percentage points. Yet, the decline in occupancy was accompanied by an inflation-adjusted increase of around 2.5% in room rates.

All of this begs the question: if occupancy rates return to pre-pandemic levels, will this trigger even larger increases in room rates?

While the numbers may portend bad news for the traveling public (and good news for hotel-casino operators), some observers see things differently.

An expert’s take on the cost of Vegas

Anthony Curtis, publisher of the Las Vegas Advisor, a longtime Las Vegas online and print newsletter detailing the city’s best deals for hotels, restaurants and entertainment, sees a more nuanced landscape.

“When things started to open up again in Las Vegas, visitors were showing up with a lot of that pandemic money in their pockets and they had money to burn. It showed in the game and they didn’t really care about room rates,” Curtis said.

“So the operators saw that they could offer lesser service which you could see in their understaffing in restaurants and hotels, in the truncated menus, and even with less amenities in the room, and get away with it.”

However, these are tough times for average travelers, Curtis pointed out. Inflation is pinching household budgets and high gas prices are impacting travelers driving to Las Vegas from California and Arizona. Airfare increases are impacting tourists from further afield. So a confluence of broader economic conditions could start to impact tourists and then force hotel-casino operators to hold the line on room rates, and maybe even lower them a bit.

Las Vegas creates its own demand

Still, it’s undeniable that Vegas has a long history of creating its own demand. The late Benny Binion taught the town a lesson when the former owner of the downtown Horseshoe Casino helped bring the National Rodeo Finals to town in the mid-1980s. traditional in Vegas between Thanksgiving and Christmas turned into a bustling few weeks with the city filled with real and wannabe buckaroos.

Today, demand creation has become an art form in Las Vegas.

Curtis himself illustrated this point by describing how the city brought in the hugely popular K-pop group BTS for two weekend shows, April 8-9 and April 15-16, to play at Allegiant Stadium in Seating 65,000, home of the Las Vegas Raiders. .

“These spectators will be in Allegiant for the first weekend and will stay all week for the second show. So it will be a week-plus event for the city with these fans going to restaurants, nightclubs and day clubs. Then, on the heels of that, there will be spring break, and then there will be the NFL Draft (April 28-30),” Curtis said.

“What we’re hoping to do at Las Vegas Advisor is alert more bargain-minded visitors to the times in between when there isn’t as much demand.”

Impact of business travel on fares

On the gaming industry side of the equation, hotel-casino operators are eagerly awaiting a return to business group travel. Convention attendance was estimated at 439,000 in February 2022, down more than 41% from 2019. Business travelers generally spend more money than average tourists (perhaps because they have expense accounts), which puts upward pressure on room rates. The conference of the National Association of Broadcasters, a group that brought together more than 90,000 people in 2019, takes place in Vegas from April 23-27.

International travelers are also absent from Las Vegas due to the pandemic. The number of passengers at the airport (embarkation and disembarkation) decreased by 8% in February 2022 compared to the same month in 2019. The number of passengers at the airport has steadily decreased throughout the pandemic. For example, in January 2022, it was down 19% compared to January 2019. A return of international travelers would also likely drive up hotel prices.

Meanwhile, Curtis argues that all is not lost for bargain-minded travelers. He said the top two financial considerations for trips to Las Vegas for average tourists remain hotel and transportation expenses.

“If gas prices and airfares stay high, casino operators will have to help travelers get to town — and that’s with room rates,” Curtis said. “Listen, we always have (hotel-casino) deals listed in our Top 10 at the Advisor where off the strip, even with resort fees included, you can get a room between $55 and $75.”


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