Is It True That If the Economy Sneezes, Las Vegas Catches a Cold?

I’ve heard in the past, as goes the economy, so goes Vegas. Any statistics to back this up? I know you don’t want to be political, but on the surface, we all do better in a healthy economic environment.

[Editor's Note: This answer is provided by LVA's business writer, David McKee. The (strong) opinions expressed herein are his own.]

One need not be too specific statistically. The correlation between the overall U.S. economy and that of Las Vegas is pretty clear-cut.

There have been three major crises in the Sin City economy over the last 25 years. Rather than attempt to apportion partisan blame, we will simply state that the responsibility for the downturns was complicated and not conducive to finger-pointing.

The first major downturn came after the Sept. 11, 2001, terrorist surprise attacks on New York City and Washington, D.C. Not only was air travel closed down for several days afterward, a fear of taking to the skies, let alone visiting Las Vegas, persisted well after the fact.

With the exception of Michael Gaughan at Coast Resorts, who actually increased hiring, all the casino bosses in town covered themselves in disgrace. Led by MGM Resorts International’s J. Terrence Lanni, they savaged payroll, cutting thousands of employees loose. It was bruited about at the time that this economic measure had been desired for a while and that 9/11 gave political cover to it. Whatever the reason, it was shameful.

While it took only a matter of months for Las Vegas to regroup from 9/11, the effects of the Great Recession of 2008 consumed as much as a decade in terms of recovery. Las Vegas was arguably both a cause and effect; our town was, arguably, at or close to Ground Zero for the adjustable-rate mortgages that lay at the heart of the 2008 crash and its aftereffects.

Casino companies took it on the jaw, particularly Station and Caesars Entertainment. Both had engaged in perilous leveraged buyouts (Station's being especially overpriced) and both found themselves in Chapter 11. Vanity projects wound up being either sold or scrapped altogether.

Consumer-spending patterns with relation to Sin City fully recovered as late as 2019, whereupon Las Vegas was trampled by the third horseman of the apocalypse, COVID. Unprepared for the near-unprecedented scale of the ensuing pandemic, Las Vegas ground to a complete halt for several weeks.

Luckily, for Vegas, when tourism returned, it did so with a vengeance. Hotel and casino revenues have improved on a year-over-year basis, reaching record levels.

This was achieved in part through draconian labor cuts and in even larger part through shameless price-gouging in the resort industry. However, consumers have provided no resistance to the latter, so it continues to this day. There have been warnings from Wall Street that the prosperity won't last but, so far, they've been proven wrong.

The next recession, if or whenever it arrives, will undoubtedly hit Las Vegas hard. In the end, what you say is true: Las Vegas does better than the overall economy in good times and worse in bad.

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Comments

Adam Soper Oct-26-2024

The ugly truth

Sure Las Vegas is doing great right now. But at what cost? They have totally ailenated the low roller crowd. The exorbitant prices they now charge and ridiculous resort fees I'm sure have caused many to swear off the town for good. I myself would never visit again however I live here now. Having said that I (like most locals) avoid the strip and even rarely ever go downtown anymore. Eating out in Las Vegas has become something for the super rich. The deals I used to flock to the town for have pretty much disappeared. Between football games with nowhere to park, to a baseball stadium for the lowest attended team in baseball being built on the strip where again parking has become a hot commodity to a race held 1 time a year that shuts down our city streets and created traffic nightmares I just no longer enjoy Las Vegas anymore because it's all about how much money can they pry from your wallets. Shame because I used to love this town.

IPA Noah Oct-26-2024

It's a little unfair

To ding the A's the attendance- what do you expect when for several years it had obvious and then official they were leaving? Last year  if the Seattle SuperSonics didn't set an attendance record either. As for eating out- outside of the tourist areas Vegas had tremendous food at a terrific value.

grouch Oct-26-2024

money

all of the corporations that own casinos just care about is money not there employees or customers with maybe the exception of south point casino ( Michael Gaughan). at the same time it is the customers fault for putting up with all of the gouging the casinos and hotels do. as to places to eat there are a lot of places that are reasonable outside of the casino ones.
what the answer is i do not know but maybe some one does

Kevin Lewis Oct-26-2024

The idiot goober factor

Vegas has always thrived, or failed to, on the extent to which people have been willing to visit and piss away their money. Economic downturns have historically affected that. But the other part of the equation is whether people care about and/or perceive value, as other vacay destinations compete for the goober dollar. Vegas has won that battle hands down. Turistas flood into town and pay literally whatever the casinos want. There is no limit. They'll pay $1000 a night and $180 for a hamburger if the casinos want them to.

Thus, I don't see the next economic go-boom as affecting Vegas that much. People/idiots have already been thoroughly conditioned. They'll crawl here, clutching their last $5 in their teeth, if they have to.

sunny78 Oct-26-2024

eco

Of course the economy impacts visitation to LV, obvious. Things that aren't essential are cut in people's budget 1st in downturns.

I think many people forget something important. LV is an escape. A splurge. For the vast majority, it's a 1x thing a year, maybe once every few years. Like other escapes, ie disney, people are willing to pay. They don't care. Life is short. As I've said many times here that I think a lot of people miss in the LV is just gouging club, people should visit other tourist places. Big cities. Las Vegas in comparison is often cheaper. Much cheaper. With more high end resorts in a small area, some of the nicest resorts in the world. Yes, the days of the $10.99 buffet is gone, has anyone gone to a basic chain restaurant these days? It's not cheap. At all. We went to one and shocked at the bill for basic/average food. Compare that to a high end LV buffet for 2x. That's a heck of a deal in comparison for quality and variety. Want cheap? Eat home. Play BJ at home.

Bruce Debele Oct-26-2024

No More Vegas

My wife and I would go to Vegas 2-3 times a year from the early 1990's until 2015.  We got tired of the resort fees, increased minimums for BJ and Craps.  The last couple of times we mostly gambled downtown.  We enjoyed the weather and spending the daytime at the pools, which also became a lot more expensive for drinks.  Now we spend our vacations in the Riveara Mia in Mexico and now when I want to play craps and BJ, I can still play for $5 or $10 at the local Indian Casinos without paying airfare or resort fees.  We will probably not go back to Vegas until the next recession hits and it becomes a lot more customer friendly, if ever.

Question of the Day - 26 October 2024

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