Deutsche Bank analyst Carlo Santarelli hung out along the Las Vegas Strip last week and “found few signs of caution as forward indicators remain favorable in most key areas.” Both New Year’s Eve business and 
convention calendars for the first half of this year were characterized as strong. “Strip-centric operators” (think MGM Resorts International, maybe even Caesars Entertainment) were deemed “attractive.” Santarelli predicted that room rates would continue to rise, based on “1) no new supply, 2) added airlift capacity, 3) continued visitation growth on top of the 2015 expected new peak, and 4) steadily growing convention attendance in 2016.”
Even without resort fees (which the Las Vegas Convention & Visitors Authority doesn’t report as revenue) casino-hotels saw 3% higher RevPAR last year, with 85% of that driven by higher room rates. Santarelli predicts occupancy levels to top 90% this year and for 2016 “to be the best domestic gaming trend year since 2011.” That’s good because operators can’t look to the baccarat sector for help. Santarelli sees no improvement there until 2017 and a 15% decline in business this year.
In that respect, it’s no better in Macao, where Santarelli’s opposite number at JP Morgan, Joseph Greff, foresees a further dive of 15% this year, followed by a modest, 3% recovery next year. Some of this pessimism is 
attributable to the slow pace of construction of major infrastructure projects such as the Light Rail Transit and the Hong Kong–Zhuhai–Macao bridge. Some of it is due to the latest government crackdown, namely on abuse of the UnionPay money-transfer system. Greff forecasts a 29% decline in all-important VIP revenues and continuing shift to mass market players “with some modest anticipated second half pickup” (emphasis his).
His views on Las Vegas echoed Santarelli’s: “a U.S. hotel market with the most favorable supply-demand characteristics with no new capacity.” He predicted volatility in the Louisiana market “given the turmoil in oil prices” and cautioned that even when regional operators do better, in general, that won’t drive a replacement cycle in slot machines, as the improved revenue will probably be plowed into non-gaming amenities. With few new, regional casinos coming on line (and none in Vegas), it looks like 2016 is going to be a real grind for the manufacturing sector.
* Desert Companion Editor Andrew Kiraly has published the definitive analysis of Sheldon Adelson‘s purchase of the Las Vegas Review-Journal 
… and it’s basically an obituary. No punches are pulled, although you’d best read it yourself. Kiraly notes some early, disturbing trends, including the fact that “Publisher Jason Taylor still holds power as grand censor of any R-J stories about the Adelson family. It’s less likely that the staff is going to claw back that vital editorial latitude, and more likely that Taylor is the beachhead for future incursions into the newsroom.”
Adelson aside, I prize Kiraly’s assessment of the R-J‘s deranged “Comments” sections, which are “the R-J’s id. That’s a transcript of what the R-J dreams about in its growling, whimpering REM sleep.” Perhaps some of those disgruntled readers will be palliated once the R-J starts delivering megaphone blasts of Adelsonian ideology.
