Sin City Casinos Warn Investors on Revenue Decline as a Result of COVID-19

Las Vegas, one of the most iconic gambling cities across the globe, is buckling up for revenue dip as a result of the Coronavirus outbreak in China. Given that movement from China to the United States is heavily restricted, casinos in Vegas are feeling the pinch of the absence of Asian high roller tourists.

American casino corporations based in Macau already took a significant blow last month when the Asian gambling capital closed its doors for two weeks, amid fears of the spread of COVID-19. With the alarming increase in Hubei infections, the number of visitors from mainland China has dropped by up to 80% to date. Consequently, casino companies operating in Las Vegas are getting worried about how the outbreak will affect their business.  

Is it Too Soon to Tell?

While analysts in the gambling industry still insist that it’s still too soon tell how adverse the effects will be, the Las Vegas hospitality industry at large is currently experiencing a decline.  For instance, the White House and Google recently cancelled their conferences which were to be held in Sin City this March as a precaution to avoid the spread of Coronavirus. On top of that, travel bans from China seem to be getting worse. All this means that the number of visitors to the State is expected to continue dwindling.

In light of such occurrences, companies like the Wynn Resorts Limited, Las Vegas Sands Corporation, and MGM Resorts International have already warned their investors that the travel bans could impact their business in Las Vegas. These forewarnings come with good reason since annual reports of companies like Wynn Resorts indicate that a substantial chunk of their business relies on international customers, including those arising from China.

Chinese Gamblers Aren’t as Material as they Once Were to Vegas

There’s no denying that the casino industry in Vegas significantly depends on high rollers from China. According to the LVCVA (Las Vegas Convention and Visitors Authority), Chinese visitors to Vegas in 2018 made up 4% of the international travelers to the city. These numbers, therefore, mean that, in the long run, there will be an impact the revenues generated by Sin City casinos.

Ironically, the data collected in January by the same LVCVA shows that the hotel occupancy and visitor volume shot up and the gambling revenues were up 9% from the same time in the previous year.

So, what does all this mean? Well, the impact of the virus as at now is yet to shake Sin City to its knees, as is the case in Macau. It appears that while high rollers from the Far East are still a substantial piece of the puzzle in the Las Vegas gambling economy, they are fast becoming less vital as the city started exploring alternative means of drawing tourists.

An excellent case study is MGM Resorts International which operates 13 Las Vegas Strip casinos. Their January report indicates that Asian tourists who play baccarat currently contribute only 2% to the company’s profitability on the strip. This is less than half of what they used to bring in as their revenue contributions ranged between 5-7% in previous years.