Question of the Day - 31 March 2022

[Editor's Note: This is Part 2 of an important question that's answered by David McKee.]

Yesterday, we discussed the continuing impact of the pandemic, along with inflation, on the travel and casino industries. As far as dining is concerned, there is always turnover in Las Vegas, but we cannot recall a period in which so many restaurants shut down permanently.

When it comes to dining, casino.org correspondent Scott Roeben opines, “A lot of people were pleasantly surprised that more Las Vegas restaurants didn’t close during the pandemic. There were doom-and-gloom predictions about the potential of up to 75% of restaurants closing, but thankfully, those ridiculous predictions didn't come to pass. I've seen numbers that 10% of restaurants have closed across the country. That number feels high for Las Vegas, which I'd put more at 2%-5% closed permanently. Restaurant closures are always going on in Vegas, and while a good number have closed, there’s also been a flurry new restaurants opening. 

“Many restaurants do continue to struggle, for a variety of reasons,” Roeben adds. “Staffing has been a huge challenge. Large numbers of people are bailing on the service industry altogether. I think some of that has to do with wages, some of the exodus is related to safety concerns, but a lot of it has been a decline in civility. Service-industry folks are just over being treated poorly by customers. Many also have to do the job of two to three people due to the staffing shortage. This issue isn't going away.”

Gordon is less upbeat. “Restaurants have been one of the areas that have struggled more than others when you think about the amount of revenue that’s being generated. We look at taxable retail sales in any number of sectors and restaurants and bars have been somewhat slower to recover,” he chronicles. “Earlier in the pandemic, clearly, health concerns were driving a lot of that and today you’re probably seeing staffing challenges for restaurants and bars to be able to service their guests and run at optimal capacity. So it continues to ebb and flow with the health crisis and the supply-chain and labor challenges. Ultimately, they’ll get back to where they were pre-pandemic, but that’s certainly an area that’s been a struggle for a number of operators.”

So has scheduling.

“One of the symptoms of staffing challenges is erratic hours for restaurants,” says Roeben. “This is wreaking havoc and makes dining out a pain, as customers often don't know if their favorite place will be open on a given day or at a certain time. There's also a big issue related to the cost of doing business, due to product fluctuations. I've heard from several local restaurant operators the cost of many products have doubled in the last year. Restaurant margins are already paper-thin and this has made it worse.”

Like Gordon, Roeben stresses the importance of the conventioneer and business traveler. “Compared to three years ago, restaurants have gotten leaner and competition remains fierce. There are really two worlds, the tourist-restaurant world and local-restaurant world. The tourist-restaurant world desperately needs convention business back.”

Entertainment was hit very hard by the pandemic and has been fairly slow to return, dogged by audience-capacity constraints and the difficulties of assembling large production shows in a period when Las Vegas’ theatrical community has been scattered to the four winds. An Adele residency at Caesars Palace collapsed ignominiously, but Resorts World came out of the gate strongly with three residency shows, even with Celine Dion sidelined by illness.

“It’s heading in the right direction and you’ve seen a number of shows reopen,” says Gordon. "With the lifting of the capacity constraints over the past 24 months, that has helped to bring back demand. But like any business, it’s been challenging over this whole cycle. It’s on the right trajectory in terms of getting back to where we were, but again, a lot of these things will take some time.”

Indeed, Cirque du Soleil’s revival on the Strip was a slow and staggered one, stretching over several months and marred by the permanent shuttering of Zumanity.

The Las Vegas Sun and Las Vegas Weekly entertainment correspondent Brock Radke is confident in the future.

“Entertainment on the Strip has made a very strong comeback, especially with the additions of big new venues like Allegiant Stadium and Resorts World Theater and I think it’s strong enough that visitors aren’t noticing if it hasn’t returned exactly to pre-pandemic levels,” he tells us. “There are still a few big and midsize shows that have not yet returned, as well as several venues that have closed for good or not yet reopened.”

Compared to two years ago, “Attendance seems to fluctuate pretty wildly. In the summer of 2021, most big entertainment events were selling out quickly, then some events and shows struggled moving into the fall and winter when conditions became uncertain once again.” Radke cites a now-familiar theme. “Right now, it seems like major events are in high demand once again, while some production shows on the Strip are seeing strong attendance only on the weekends. This is of course partially due to the slow return of conventions.”

Still, there are green shoots for the present and near-future.

“The success of sports and entertainment at Allegiant Stadium has brought a major boost and the continued development of new venues like the MSG Sphere and Fontainebleau demonstrate the overall positivity for the future. New production shows to be launched by Cirque du Soleil [Mad Apple at New York-New York], Criss Angel [AMYSTIKA], and Spiegelworld also add excitement for that more traditional type of Vegas entertainment,” Radke concludes, noting that the only major casualty besides Zumanity was Wynn Las Vegas’ Le Reve, scrapped in favor of a show yet to be named.

There’s been strong demand for entertainment off-Strip as well, as at Majestic Repertory Theatre, whose original musicals The Sandman and The Craft have played to holdover business. “Quality is challenging, because COVID is still shooting through the city and performers are getting sick,” reports Majestic founder Troy Heard. “It feels like Masque of the Red Death—we’re all dancing to entertain the prols.”

So. Can we stick a pin on the calendar and say, "This is when Vegas will well and truly be back"?

Gordon offered some closing thoughts on that issue. “By the time we get into 2023, I would assume that we're back and operating near or at optimum levels. It could happen sooner. It certainly could, however, take some additional time, because the evolution of the health environment is adjusting on a daily basis,” whether it’s the sudden retirement of the state’s mask mandates or the emergence of a new strain of COVID in Hong Kong. 

“The community’s response to that evolution also plays a role,” says Gordon. “There are certainly other external factors, including the broader economic cycles of the United States. Clearly, being tourism dependent, we're at the mercy of what happens more broadly. So a number of factors out there could affect that, but I would suggest that the market would be back in some form that looks like normal at some point in 2023.”