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US – New conventions and downtown regeneration to boost recovering Las Vegas further

Nevada’s recovering casino sector saw gaming revenues surpass the US$11bn threshold in 2013 for the first time since 2008. Coupled with more conventions and the continued regeneration of downtown, analysts are hoping for a further upswing in 2014.

The Strip saw GGR grow by 4.8 per cent, representing the largest single-year percentage increase since 2011 with increased baccarat play proving a crucial factor in the recovery. Revenue reached $6.5bn, edging closer to the all-time revenue record of $6.8bn in 2007.

Figures released by the Nevada Gaming Control Board this month show that across Nevada, casinos generated $11.14bn during 2013, 2.6 per cent better than in 2012. Nevada’s record high annual revenue remains $12.8bn in 2007. Total figures were boosted by December’s figures, where Nevada casinos generated $1.034bn in GGR, representing the second $1bn month in 2013.

Nevada baccarat revenues reached their second highest ever at $1.6bn in 2013, representing growth of 16.2 per cent, set a single-year record. The game accounted for 36.4 per cent of the total State table game revenues of $4.38bn.

Union Gaming Group analyst Robert Shore commented: “Baccarat play continues to grow and be an important factor in the overall Strip performance. Of course, the activity only really benefits a few casinos that cater to that audience.”

Slot revenue reached $6.75bn, accounting for 60.6 per cent of the overall GGR, its lowest share since 1990 and down by 1.2 per cent.

Whilst some analysts saw the improved results as further sign of recovery, Deutsche Bank gaming analyst Carlo Santarelli said they were ‘misleading’ as excluding baccarat, table revenue was down 8.1 per cent and slot revenue was down 1.2 per cent.

He said: “The usual year-end accounting shift, in which December slot is depressed, was muted this year given New Years Eve was in the middle of the week, relative to Monday last year. Accordingly, January slot hold is a very tough comparison this year.”

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski agreed saying that slot revenue was ‘the most relevant barometer for the health of Strip operators’ gaming floors.’

Wells Fargo Securities gaming analyst Cameron McKnight added: “Baccarat revenues are still driving growth.”

Away from the Strip, Clark County was the only other reporting area showing an increase, up 1.9 per cent with Downtown Las Vegas falling 1.6 per cent.

Figures on The Strip should be boosted by new convention business according to the Las Vegas Convention and Visitors Authority (LVCVA). The American Library Association’s annual conference and exhibition, American Wind Energy Association’s Windpower and Solar Power International are all set to take place in Las Vegas in 2014 for the first time.

These three new shows are expected to bring an estimated 50,000 attendees generating $63m in local non-gaming economic impact. The destination will also welcome 70 new conventions of at least 500 attendees each during 2014, bringing an estimated 100,000 additional delegates to Las Vegas.

“We are always seeking new business,” said VP of Global Business Sales for the LVCVA, Chris Meyer. “Las Vegas has been the number one tradeshow destination in North America for 19 consecutive years. We offer an array of unique resorts, entertainment and the equivalent of 185 football fields of meeting and exhibition space in one destination. The combination provides groups the opportunity to conduct serious business but

also balance it with teambuilding or networking activities.”

In addition to new business, nine rotating shows return to the destination this year attracting more than 320,000 delegates for a non-gaming economic impact of $404m.

Convention and tradeshow delegates represent 12.7 per cent of all visitors to the Southern Nevada region, approximately 5.1m business travellers a year. Las Vegas’ meetings and convention industry employs approximately 58,000 people and generates us$ 6.8 billion in local non-gaming economic impact.

Despite the slight downturn in 2013, Downtown Las Vegas continues to celebrate its rebirth with more than $83.5m in public and private development completed last year and another $263m of construction projects currently underway.

In 2013^*, downtown Las Vegas welcomed numerous new businesses and entrepreneurs that created nearly 1,500 permanent jobs. Downtown Las Vegas has been experiencing unprecedented redevelopment in recent years and marked 2012 with the completion of at least $754 million in public and private projects during a time period that came to be known as the “Year of Downtown.”

A minimum of an additional $457m in new development is on tap to be completed in downtown Las Vegas in 2014, according to the city of Las Vegas Economic and Urban Development Department.

“The growth and redevelopment of downtown Las Vegas is strong today,” declared Las Vegas Mayor Carolyn Goodman. “The area is attracting national firms, start-up companies and ‘mom and pops,'” said Goodman of the historical area where hotels such as El Cortez and the Golden Nugget helped Las Vegas get its start as a gaming and entertainment destination. “It’s a renaissance locals haven’t seen or experienced in decades. Even just a few years ago, many Southern Nevadans wouldn’t have dreamt of coming downtown to go to dinner, the theatre or meet friends. Today, there is growing preference amongst locals for downtown’s authentic vibe and easy walkability, which they find more welcoming than the Strip just a few miles to the south.”

Most recently, the former Lady Luck Hotel & Casino reopened in October 2013 as the Downtown Grand Las Vegas Hotel & Casino after completing a $100-plus million renovation. The new Downtown Grand created hundreds of jobs via the property’s 634 guest rooms and a bevy of new restaurants and bars that further diversify downtown’s dining scene.

In fact, downtown Las Vegas has become a destination for all types of cuisine and nightlife with the 2013 openings of several new venues, especially in the rapidly developing Fremont East Entertainment District. This eclectic 6-block, pedestrian friendly community is in the heart of more than 28 acres assembled by Zappos.com CEO Tony Hsieh, who founded the Downtown Project to invest and assist small businesses in urban Las Vegas. As a whole, the Downtown Project has helped 92 businesses and generated more than 1,100 construction jobs, as well as 687 permanent jobs in 2013.

A popular destination in the Fremont East Entertainment District is the new Downtown Container Park. This retail and dining venue developed by the Downtown Project is comprised entirely of repurposed shipping containers housing unique restaurants, boutiques and galleries. It has welcomed approximately 250,000 visitors since it opened in late November 2013. Nearby, another Downtown Project development called Inspire Theater opened on the western edge of the Fremont East Entertainment District, offering a 150-plus seat auditorium, new bar concepts and downtown’s only global newsstand/cafe.

Thanks to increased development, downtown Las Vegas has welcomed hundreds of new professionals in the past year, including more than 1,500 employees of Zappos, which moved late last year into its new headquarters, the former city hall. In addition, growth in various industries, including technology, health care, law and the arts, has spurred an influx of new residents who are looking to work, live and play downtown.

“The continued redevelopment progress is truly transforming downtown Las Vegas into the valley’s center of commerce, culture and community,” added Terry Murphy, President of the Downtown Las Vegas Alliance (DLVA), a non-profit consortium of more than 60 downtown businesses working to promote the area.