Sacrificial rites in Las Vegas

Without pointing any fingers of blame, the Coronavirus pandemic has laid bare a feeble testing response and an inability to get a vaccine before the public until year’s end at earliest (which we should have been expecting all along). It’s also unleashed a virulent strain of social Darwinism, as people like Las Vegas Mayor Carolyn Goodman (I) present their constituents as sacrificial offerings to a ‘reopened economy.’ We turn the microphone over to NBC News anchor Chuck Todd, who had this to say last Sunday: “It’s against this backdrop that some of the nation’s governors are taking the risky step of opening their states for business. Behind that decision is a brutal calculation, that the unemployment, the hunger, the depression and the social dislocations of a stalled economy are worse than the certainty of an even more—larger death toll from COVID-19 as businesses reopen. Health care experts acknowledge the necessity of getting people back to work, but warn that moving too early could invite a second wave, with disastrous consequences.”

We’ve lost household income to the health crisis, so these words aren’t written without sympathy for the myriad casino workers forcibly idled by the pandemic, watching their severance pay dwindle. But can we realistically go back to a world where nightclubs and pool parties are king and queen, and in which players crowd around the craps table, elbow to elbow and high-fiving each others after a good roll?

Now, “On the always busy, always noisy, never sleeping Las Vegas strip, you can now hear birds chirping,” reports The Associated Press. Complained septuagenarian Elvis impersonator Chris Morehouse, “It’s like the end of the world.” With one-third of the state’s jobs based in tourism (the price of a too-late move toward economic diversification), we’re looking at $7.7 billion in lost wages, although that’s a worst-scenario, predicated on another six weeks of lockdown, which would put an incredible burden on the Silver State’s already-overwhelmed unemployment system. Not helping are Nervous Nellies like Goodman, who is predicting the death of Nevada‘s tourism industry unless a panic-driven reopening, unrestrained, is executed forthwith. Business will return. It always does. It just may take longer this time. As Gov. Steve Sisolak (D) put it, “We will rebuild our economy. Las Vegas will continue to thrive. But I can’t do that if I lose more people.”

Maybe the questions we’re asking are the wrong ones. Yes, when will Mirage dispatcher Kimberly Ireland be able to work again? But why is she having to support her daughter during the latter’s maternity leave? Why is
anybody in the world’s richest country having to go unpaid during maternity? Even Ireland says it’s too soon to go back on the job. “Everybody wants to get back to semi-normal,” she told The AP. “I just don’t think it’s safe.” Even when facing foreclosure, Mandalay Bay waiter Victor Chicas says, “Life is more important than anything else. You’re not going to buy life with money.” Tell that to Goodman. Economist Brandy Little shows a better grasp of the underlying issue than does Her Honor, namely that the real question is whether the rest of the world is going to have the money to indulge in Sin City when it does reopen. That’s the $1 billion/month query.

Assuming that Phil Ruffin can make good on his May 15 reopening date for Treasure Island (which would require a two-week decline in Coronavirus cases in Nevada), he’ll be facing dietary room rates, down 54% for the following week, with an ADR of $115/night, -59% midweek and -44% on weekends. Las Vegas Sands has the worst of it, -68% on weeknights and -47% on weekends. MGM Resorts International has no stated plans to be open May 17-23 but, if it were, would be off 61% and 43% respectively. Caesars Entertainment looks better, -49% across the board, while Wynn Resorts takes a -50% hit on weekdays but only -26% on weekends. Given the uncertainty surrounding when the Big Four will reopen, perhaps Ruffin can upsell his room inventory.