The optimism for Las Vegas has risen significantly, fueled by a highly successful end to 2022, where Nevada surpassed its 2021 gaming revenue record by November. By the conclusion of December, the state had achieved 22 consecutive months of gaming revenue exceeding $1 billion, culminating in a total of $14.8 billion for 2022, a 10.5% increase from 2021.
In December, even during a traditionally slower period, the Strip achieved an all-time revenue record of $814.1 million, marking a 25% increase over December 2021, when visits were hampered by the Omicron variant.
Throughout 2022, the Strip generated $8.2 billion in revenue, representing a 17.1% increase over the $7 billion recorded in 2021, despite visitation numbers, including international tourists and convention attendees, not yet returning to pre-pandemic norms.
A total of 38.8 million visitors arrived in Las Vegas in 2022, a 20.5% increase from the previous year, but still 8.7 million short of the pre-pandemic figure of 42.5 million in 2019. The convention business showed signs of recovery as well, with nearly 5 million attendees in 2022, up from 2.2 million in 2021, but still trailing the 6.6 million visitors recorded in 2019. Pre-COVID estimates from the Las Vegas Convention and Visitors Authority suggested average convention visitors spent about $970 per trip, significantly higher than the $792 spent by leisure visitors.
In 2022, Las Vegas's hotel occupancy was at 79%, which is nearly 10 points lower than in 2019. During the 2022 fiscal year ending June 30, Nevada’s 296 major casinos reported a net income of $4.1 billion, the highest ever recorded, representing a $2.1 billion increase (100.7%) compared to the 2019 fiscal year. The Strip's casinos recorded a net income of $1.8 billion, the second highest on record.
Looking forward, the optimism is bolstered by the start of 2023, particularly with the Consumer Electronics Show (CES) in early January exceeding expectations with 115,000 attendees, including 40,000 international visitors from 140 countries, far surpassing the 45,000 attendees of the prior year. Future events include the International Builders Show, expected to attract 100,000 visitors in late January, while the Formula 1 Las Vegas Grand Prix in mid-November is projected to draw 100,000 attendees, with visitor spending estimated to be close to $1 billion.
Super Bowl LVIII is also set to take place at Allegiant Stadium less than two months later, anticipated to generate an economic impact of $600 million.
The return of international visitors is vital for fully recovering from COVID-19. In November, 238,000 international passengers traveled through Harry Reid International Airport, a decline from 305,000 in November 2019. This return of foreign visitors positively impacted table games, with Baccarat winnings increasing by 68.7% to $148 million in 2022.
In late 2023, the Strip is expected to see the opening of two major new projects: the $3.2 billion Fontainebleau Las Vegas, featuring 3,700 rooms, and the $2.1 billion MSG Sphere at The Venetian, boasting 17,500 seats, a massive exosphere for programmable lighting, and the largest LED screen worldwide.
Steve Hill, president of the Las Vegas Convention and Visitors Authority (LVCVA), expressed confidence in 2023, stating, “This is going to be a spectacular year in Las Vegas.” He dismissed concerns regarding the potential effects of a recession, saying Las Vegas would likely adapt and thrive regardless. Hill emphasized the uniqueness of Las Vegas, stating, “There’s no other place like Las Vegas.”
Other developments include projects along the Strip, such as one by Texas billionaire Tilman Fertitta, as well as plans by Universal Studios for a year-round horror park off the Strip. Hill noted the global interest in Las Vegas, asserting the MSG Sphere will introduce a unique entertainment venue.
Casino consultant Josh Swissman remains optimistic about 2023, forecasting strong gaming months ahead for Las Vegas. He emphasized the significance of the upcoming event calendar, although he anticipated a slowdown in growth compared to the previous double-digit increases seen in gaming revenue. Swissman highlighted the continuing importance of foreign travel, especially from markets like China.
Brendan Bussmann, managing partner at B Global, noted that while Las Vegas is well-positioned for recovery, the impact of an uncertain economic climate remains to be seen.
Despite positive trends, some areas have experienced revenue dips. Casinos off the Strip saw a 1.7% decrease in revenue year-over-year in December, while downtown Las Vegas experienced a 6.9% decline. Nonetheless, the tourist sector remained robust, with average room rates in 2022 reaching $171 per night, up 28.9% from 2019.
David Kieske, CFO of VICI Properties, the largest property owner on the Strip, shared a positive outlook, attributing Las Vegas’s appeal to its unique offerings that cannot be replicated elsewhere. He stated, “No other road in America can showcase what goes on the Strip.”
In recent years, the proportion of gaming revenue has evolved, with non-gaming revenues now accounting for a larger share as conventions and entertainment return. According to the latest Gaming Control Board report, non-gaming revenues reached $12 billion in 2022, up from $5.1 billion in 2021. Despite the return of strong convention business, the overall gaming revenue percentage has returned to pre-pandemic levels. According to Swissman, events like the Global Gaming Expo have helped support non-gaming revenue, indicating a positive trend for Las Vegas's economic future.
