Friday, January 11, 2013

Las Vegas' November 2012 Has Few Bright Spots

The numbers are in for November 2012, and Las Vegas doesn't have much to be joyous about.  The first story is from the Las Vegas Review Journal, cited by CDC Gaming reports.  Nevada year over year gaming revenues dropped 11% for November, to just over $782 million for the month.  In Las Vegas, the percentage drops were worse, with the Strip down 12.8% and Downtown down 17.2%.  The November reversal countered two previous months of year over year increases.  Could it be a quick reaction to the election results?  Perhaps, but I don't think that's a key driver.  It likely shows that the economy is still weak and we indeed could be headed for another recession dip.

The second story is from the Las Vegas Review Journal that shows some good news for Las Vegas.  Visitor attendance for November 2012 was 3.1 million, up from 3 million from November 2011.  That is good news.  Some of the increase was due to a couple of conventions making reappearances and existing conventions having slightly larger attendance.

This is interesting in that in the same month, there were approximately 100,000 more visitors to Las Vegas, but Las Vegas gaming revenue was down almost 13% on the Strip and over 17% downtown.  People showed up, but were not gambling as much.  The story does talk about hotel average daily room rate (ADR) being up 0.6% to $104 for the month and occupancy rates at 79.7%, up from 78.3% in the prior November.  Again, not too bad, but the story provides enough information to dig deeper and learn more.

The story provides comparisons to the highs enjoyed by Las Vegas in 2007 before the economy soured.  During the boom, occupancy was higher at 90.4% and ADR was $146.53.  Those numbers are much better than the current 79.7% / $104.  But this isn't all the bad news in the numbers.  The story provided the number of rooms in 2012 and 2007, which allow estimation of a different metric, revenue per available room or RevPAR.  RevPAR is a better measure than ADR since revenues are measured against the total number of rooms available, as opposed to ADR, which measures revenues against the number of rooms sold.  If you had a 100 room hotel and just sold one at a rate of $1,000, the ADR would be $1,000 but RevPAR would be $10.

So the estimated RevPAR for November 2012 was $82.89 and for 2007 was $132.46, based on the occupancy rates, ADR and number of rooms in the Las Vegas market at the various times.  So, estimated RevPAR is still down about 37% from the peak.  If you look at ADR, Las Vegas is down about 30%.  But look at room revenue and you'll see just how much money that isn't coming in.  If occupancy and ADR had stayed at the 2007 levels, Las Vegas would have brought in about $155 million more in room revenue, just for the month.  That would have more than made up for the lower gaming revenues.  Las Vegas has hopeful signs, but they've still got a long way to go to where they were before the economic downturn.


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