Nevada’s Record Tourism Helps Casinos Return to Profit

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Monday, January 30th, 2017 | Written by Adam Brown

Tourism numbers have been on the rise in Las Vegas for the past three years, and the latest report released by the Las Vegas Convention and Visitors Association (LVCVA) confirms the ongoing trend with 2016 marking a record-breaking year for the industry.

Record Breaking Year

A whopping 42.9 million people visited Sin City last year to stay at its resorts, play at its casinos, and enjoy all of the entertainment and attractions that the destination located in the Nevada desert has to offer. Overall, the number of tourists was up by 1.5 percent compared to 2015’s previous record-breaking tally.

Hotel occupancy rates increased by 1.4 percent overall, with the average daily room rate increasing to $112 per night. The number of convention attendees also increased by 7.1 percent with 6.3 million visiting the state, representing the highest number since 2006, and a record high for the resort.

$1.2bn in Investments

Industry insiders believe that more than $1.2 billion in private investments that were made in 2016 has played a major role in the tourism boom. The T-Mobile Arena at MGM Resort, the Park Theater at the Monte Carlo, TopGolf at MGM Grand and the new SpeedVegas are all bringing in tourists who have interests beyond just trying their luck at the casinos.

Gambling Reaping Rewards

Although much of the money that Las Vegas tourists spend is for entertainment, dining and accommodations, the Nevada gambling industry is reaping the benefits of the influx of visitors. As Nevada Gaming Control Board analyst Michel Lawton explains:

“Gaming revenue has increased five of the last six years. But it still remains well below peak levels. In fact, it’s 13.8 percent below the peak levels recorded in fiscal year 2007, while room revenue is at an all-time high. We have recorded records for room revenue in three consecutive fiscal years.”

Room Rentals Increasingly Profitable

The Nevada casino industry posted revenues of $25.2 billion in 2016, according to a report issued by the Nevada Gaming Control Board, with its overall profits of $983.68 million positive for the first time since 2008. Compared to 2015 when the overall industry posted losses of $662 million, the numbers out of Nevada are clearly a reason to celebrate. Meanwhile, gambling accounted for just 43.2 percent of total revenues, while room rentals and fees, on the other hand, generated $979 million.

Commenting on the numbers, David Schwartz, director of the Center for Gaming Research at the University of Nevada, stated that Nevada’s casino resorts were always about offering a more rounded tourist experience than just gambling. He also noted that the industry’s revenue pattern has now shifted, explaining:

“If the rooms do eventually being more profitable than the casino, that would be a total shift because it used to be the casinos was where all the revenues were made.”

Public Traded Casinos Thriving

The big winners in the casino industry are publicly traded casinos. The large mega casinos located in Las Vegas and throughout the rest of the state made up 78 percent of the revenues. Smaller casinos may therefore struggle to stay afloat, as it becomes increasingly difficult to compete with the giants that have billions to invest in adding new attractions, improving facilities and marketing to the general public.

Nevada Casino Profits

2016: +$983.68m
2015: -$661.78m
2014: -$743,69m
2013: -$1.35bn
2012: -$1.21bn
2011: -$3,99bn
2010: -$3.43bn
2009: -$6.78bn
2008: +$721,18m
2007: +$2.29bn

International Tourists on the Rise

International travelers are being credited for much of the boom, with the Nevada Commission on Tourism doing its utmost to attract visitors from countries all across the world. Asian tourists obviously continue to be an important focus of its marketing strategy, and as far back as 2004 Nevada became the first US state to open a tourism office in the Chinese capital of Beijing. In 2016, direct flights from Beijing to Las Vegas were subsequently introduced for the first time.

These days, India has been identified as an important potential market and in early 2016, an office was opened up in New Dehli with the Nevada Commission on Tourism actively working on bringing wealthy Indians to the city for luxury vacations. The commission also partnered with the well-known Indian tourism marketing company Sartha Global to promote Sin City as the ultimate destination.

Furthermore, the Commission is aiming to offer a direct flight from New Delhi to Las Vegas in 2017 in order to increase Indian tourism further. Meanwhile, airlines are exploring the possibility of offering nonstop service from the Middle East to Las Vegas to bring wealthy individuals from the United Arab Emirates and beyond. Looking ahead, Rossi Ralenkotter, CEO of the Las Vegas Convention and Visitors Authority, stated:

“Together with our resort partners, we look forward to aggressively marketing the destination around the world to continue attracting more visitors and break the record again this year.”