The National Association of Broadcasters (NAB) canceled next month’s trade show and conference at the Las Vegas Convention Center on Wednesday, saying the recent surge in the COVID-19 Delta variant has “presented unexpected and insurmountable challenges.”
Strip convention and meetings operators had expressed concern recently that rising COVID-19 case numbers in the past few weeks could slow the Strip’s economic recovery. In July, Strip casinos recorded their highest single-month gaming revenue total ever — $793.7 million.
MGM Resorts International CFO Jonathan Halkyard told attendees at the virtual Bank of America lodging and hospitality conference on Sept. 9 that the company had seen a few convention cancelations, but otherwise provided a positive outlook on business for 2022.
A Las Vegas Convention and Visitors Authority (LVCVA) spokeswoman said the agency has not received cancelations from any other scheduled shows.
Chris Meyer, a consultant to the convention and meetings industry and former LVCVA sales executive, said Wednesday the loss of the broadcasters' convention draws attention because of its size — nearly 100,000 attendees.
However, Las Vegas is still attracting smaller group meetings. In 2019, the city hosted 22,000 meetings with more than 70 percent having less than 200 attendees.
“The big stuff draws the attention and everybody recognizes the large trade shows,” Meyer said. “What I’m hearing from the (convention) sales folks is that a lot of smaller groups are still coming in the fourth quarter (October through December).”
Meyer noted that two parallel large trade shows are still on the books for the first week of November. The Specialty Equipment Market Association (SEMA) show will take place Nov. 2-5 at the Convention Center. The companion Automotive Aftermarket Product Expo (AAPEX) will take place Nov. 2-4 at Caesars Forum and Sands Expo.
Pre-pandemic, the shows would attract upward of 130,000 attendees, Meyer said. He didn’t want to predict the size of this year’s given the fluid COVID-19 situation.
“I’m still predicting Las Vegas will host the largest (trade show) event in North America (through the SEMA and AAPEX shows) this year,” he said.
The National Association of Broadcasters event was one of several conferences that had mandated all attendees show proof of a COVID-19 vaccination. Two of the conference’s largest exhibitors, Sony Electronics and Canon, decided to withdraw from the event in the past week, which may have precipitated the cancelation.
The show attracted 90,000 attendees to its last in-person event in 2019, and had an economic impact of $153.3 million on Las Vegas, according to the convention authority. The agency did not provide an economic impact number for the now-canceled October show.
MGM Resorts operates three of the Strip’s largest event facilities at MGM Grand, Mandalay Bay and T-Mobile Arena. The company also manages substantial convention and meeting space at its 11 gaming and non-gaming properties, including Aria and Bellagio.
Halkyard said the company is “seeing a near-record lead generation as it relates to group business for 2022.” He noted midweek business that canceled last month and through the end of the year has been “largely filled by transient and leisure customers like we saw in the summertime. None of this gives us any reason to think that 2022 will be any different than we thought it would be a couple of months ago.”
Convention and meeting attendance in Las Vegas during 2020 was decimated by the pandemic. The total number of delegates during the year fell to a little more than 1.7 million, a decline of 74 percent from the more than 6.6 million meeting attendees in 2019.
Through July, the convention authority has recorded a zero for the number of convention attendees in 2021 despite several shows taking place, including the World of Concrete conference at the convention center in June. No estimates have been given for the first major trade show since the pandemic, which drew 60,000 people in January 2020.
The LVCVA said July drew 3.3 million visitors to Las Vegas, with hotel occupancy exceeding 79 percent and 88.1 percent occupancy on weekends. For the first seven months of the year, visitor volume is nearly 16.8 million, down 32.4 percent from the same point in 2019.
Southern Nevada’s average daily room rate was $152 in July with revenue per available room, a financial indicator, exceeding the 2019 comparable levels for the first time in more than a year and hitting an average of $120.79.
Early on in 2021, Las Vegas convention and meeting officials were hopeful any business during the year would fuel conference bookings during 2022.
In a statement posted to its website, National Association of Broadcasters officials said, “It has become apparent in the face of these challenges that we can no longer effectively host NAB Show or our co-located events, the Radio Show and Sales and Management Television Exchange, in person.”
The organization said it was moving forward with plans for its show in April, which is the event’s traditional annual time slot. The NAB canceled its 2020 show because of the pandemic.
“We deeply value our three-decade long partnership with NAB and will greatly miss seeing the NAB community this fall,” Convention Authority CEO Steve Hill said in a statement. “We eagerly await the show’s return in April.”
Meyer said the cancellation didn’t surprise him, given the October scheduling, which he thought would put a financial strain on some of its companies and attendees, who would have to return in six months.
Less than five years after bringing the NFL’s Oakland Raiders to Las Vegas, Southern Nevada is dancing with Major League Baseball’s Oakland Athletics, the Northern California city’s last professional sports franchise, which is seeking to flee the crumbling Oakland Coliseum for possibly a new multi-billion dollar stadium in the desert.
The situation surrounding the Athletics – often referred to as the A’s – has far different scenarios and circumstances than the 2016 endeavor by the now-Las Vegas Raiders. The AFC West team launches its second season inside the $1.9 billion Allegiant Stadium next month.
However, when this dance music ends, the possibility exists that the A’s will remain in Oakland.
A’s President David Kaval said the franchise is on parallel paths toward vacating the 55-year-old Oakland ballpark that also formerly housed the Raiders.
One path is a waterfront ballpark in Oakland as part of a $12 billion development at the Howard Terminal near Jack London Square. But the A’s and the city are roughly $500 million apart in negotiations on a term sheet. A preliminary vote on the 34,000-seat stadium by Oakland’s City Council is scheduled for Tuesday.
The other path leads to an estimated $1 billion retractable roof ballpark with 33,000-to-35,000 seats located on a yet-to-be-determined Southern Nevada location. At least two sites on the Strip, behind Bally’s Las Vegas and across from the Sahara, are being considered.
The A’s contract to play in the nearly 47,000-seat Coliseum expires in 2024, so a time element is in play.
The unanswered question hanging over the process like a fog bank above San Francisco Bay is how much the A’s would seek in public financing from Southern Nevada to build the stadium.
Las Vegas has the distinction of providing the single-largest-ever pot of public money for a stadium project in the U.S. – $750 million – to help the Raiders develop the 65,000-seat glass-domed facility. A special session of the Legislature was needed to approve an increase in the Strip’s hotel room tax.
Allegiant Stadium is located on 62 acres along the west side of Interstate 15, across from Mandalay Bay, and has large lanai doors that open to offer views of the Las Vegas Strip.
Kaval said the baseball stadium’s location – the A’s are considering nearly two dozen potential sites – would help determine a private-public partnership. Allegiant Stadium is in unincorporated Clark County. Meanwhile, the A’s have been exploring sites along the Strip, in downtown Las Vegas, Henderson and Summerlin.
“It’s too early to figure that part out yet. We don’t know,” Kaval said during a half-hour phone interview with The Nevada Independent last week. “We’re approaching this with humility and we’re just dipping our toe in the water to see what’s possible and to understand. Obviously, the community is just coming off the pandemic and you have a lot of things happening. We just want to be really thoughtful about how we approach it. We’re really trying to learn more about the opportunity and how some of these partnerships take place.”
At last week’s Major League All-Star Game in Denver, baseball commissioner Rob Manfred said Las Vegas was not a bluff to frighten the city of Oakland. Kaval insisted that the Las Vegas Valley was not a stalking horse to push a favorable Oakland vote. He said the team is serious about Southern Nevada.
He and other A’s executives have made three trips to Las Vegas since Major League Baseball gave the A’s approval to explore stadium options outside Oakland. Another trip is planned Wednesday, regardless of the vote.
Kaval said the team retained Legends Global Partnerships, a company part-owned by Dallas Cowboys owner Jerry Jones, to conduct a market study on Southern Nevada to help determine a location for the ballpark and the potential audience for the American League franchise.
“If (the market study) shows (a) 90 percent locals (fan base) then a location like Henderson or Summerlin makes a lot of sense,” Kaval said. “If there is going to be a predominant or significant number of tourists, then being in the resort corridor makes sense.”
The Raiders engaged Legends to secure their stadium’s naming rights and as the official premium ticketing and sponsorships agency.
“Key questions need to be answered,” Kaval said. “This will drive a lot of our decision-making. We commissioned the study because we are very serious about this parallel path in Las Vegas. That’s why we’re coming every two weeks. The early returns are positive and exciting, and we want to see how this plays out.”
Public financing downsides
Stadium financing pitfalls concern some observers.
Las Vegas could join a handful of cities that have funded multiple stadium projects simultaneously or in close proximity and have run into financial troubles.
Victor Matheson, a sports economist and economics professor at College of the Holy Cross in Worcester, Massachusetts, said Baltimore had financial “horror stories” providing public financing for Camden Yards, home to baseball’s Baltimore Orioles, and M&T Bank Stadium for the NFL’s Baltimore Ravens.
When the recession hit in the late 2000s, Matheson said Cincinnati had trouble paying off bond obligations that funded the Great American Ball Park for the Cincinnati Reds and Paul Brown Stadium for the NFL’s Cincinnati Bengals.
Baseball stadiums, he said, often sit empty before and after 81 regular season home games. The challenge in Southern Nevada, he said, could be creating two multi-billion-dollar venues that are competing for the same events other than football and baseball.
Matheson also warned of a “substitution effect” as both tourists and locals spend money at the stadium that would have gone into the local casino market. He was critical in 2016 of Allegiant Stadium’s public financing.
“Las Vegas, which was among the hardest-hit places by the pandemic because it depends heavily on the hospitality sector, may not have the money to provide significant public funding,” Matheson said in an interview last week. “Convention traffic is not yet back in Las Vegas, nor is international tourist traffic. This could put Las Vegas in the same boat as Cincinnati and Baltimore.”
The Raiders played the 2020 inaugural home games at Allegiant without fans because of capacity restrictions brought about by the COVID-19 pandemic, recording zero dollars in game day ticket sale proceeds and concession revenues.
Tourism declines led to a more than 60 percent drop in Las Vegas hotel room taxes in 2020, which fund the stadium’s public financing. Clark County twice dipped into the Las Vegas Stadium Authority bond reserve to make its twice a year payments.
Jeremy Aguero, a principal at Applied Analysis, a research and consulting firm that serves as staff for the Las Vegas Stadium Authority Board, said two years of reserves were built into the Allegiant Stadium financing and more than a year-and-a-half of debt service financing remains. Las Vegas, he said, is building back its room tax generations.
As for financing a potential stadium for the A’s, he said it was a “loaded question” when asked if there could be concerns about public money for another ballpark.
Until “we know all the circumstances of what is being proposed,” he wasn’t going to speculate about a potential stadium for the A’s. Aguero said he hasn’t met with the team’s representatives.
“The approach they are taking is correct because they are not leaving any stone unturned and they are doing a lot of groundwork,” Aguero said. “We just have to be mindful of the structure of any deal. The devil is in the details, but what we’ve learned, no one can pull off a major project like Las Vegas.”
Kaval agreed with Aguero’s analysis on that last point.
“The success Las Vegas has had in doing big projects, like Resorts World, Allegiant Stadium and the convention center expansion is a positive attribute that the commissioner’s office noted,” Kaval said. “That’s important to make this a reality.”
Clark County Commission Chairwoman Marilyn Kirkpatrick said in an interview she was hesitant to support any public financing for a baseball stadium “at this time.” She had “just a meet and greet” with the team’s contingent and was looking forward to seeing any detail the team provides on the public financing aspect.
“I think it’s way too soon. I don’t think we can fund what they might be asking for,” Kirkpatrick said. “We have a lot of businesses still hurting and we’re still in the middle of a pandemic.”
Toward the end of the legislative session in May, lawmakers rejected an idea by a lobbyist representing a consortium of Southern Nevada governments, who said there was interest in allowing Sales Tax Anticipation Revenue (STAR) bonds and Tourism Improvement Districts as a potential “tool in the toolbox” for developers. Language for allowing the use of STAR Bonds for a stadium was removed by lawmakers during the conference committee.
Kaval said it was important for the A’s to “understand what the options are.” A few years ago, he said Mesa, Arizona – where the A’s hold spring training – funded a new baseball facility through a rental car tax. In 2008, Washoe County financed $30 million of the $55 million cost for Greater Nevada Field in Reno through a 2 percent tax on rental cars.
Having Major League baseball in Southern Nevada would drive tourism and drive jobs,” Kaval said.
Show me the money
A recent Forbes study showed the value of the Raiders was $3.1 billion at the end of 2020, up from $761 million in 2011 and an increase of 117 percent over just the past five years.
The rise was attributed to the move to Las Vegas, as well as personal seat licenses and ticket sales associated with Allegiant Stadium. The Raiders are now the 12thmost valuable NFL franchise and the 29th most valuable professional sports franchise.
Major League Baseball took notice of the figures.
Bo Bernhard, executive director of the UNLV International Gaming Institute, suggested, “in the sports world, locating a franchise in Las Vegas can catapult your value.”
Bernhard was involved in the early stages of the Raiders move by producing a report that showed the NFL and Las Vegas could co-exist when Nevada was the only state with legal sports betting.
That issue disappeared with the nationwide legalization of sports betting in 2018.
Sports betting consultant Sara Slane said Major League Baseball has multiple sports betting partnerships for official league data and league-controlled assets.
“Major League Baseball is very ingrained in the sports betting industry,” Slane said. “The teams have also embraced sports betting. These deals range from direct market access for mobile and retail (wagering) in Arizona with the Diamondbacks to more traditional sponsorship and marketing opportunities.”
Bernhard expects the A’s would follow the same path with marketing agreements and partnerships as the Raiders and the NHL’s Vegas Golden Knights.
“The Raiders found new ways to monetize the game experience and Las Vegas is far more attractive to those in the corporate world because of the entertainment here,” Bernhard said. “The Raiders, and baseball, add to that value.”
All roads lead to the Strip
The 2016 debate over the Raiders’ stadium request quickly ended when the major Strip casino operators, including MGM Resorts International and Caesars Entertainment, agreed to a room tax increase – roughly 0.88 percent or $1.50 a night – that was overwhelmingly approved by the Legislature and signed off by then-Gov. Brian Sandoval.
The other fact was the Strip’s insistence that the $1 billion, 1.4 million-square-foot expansion to the Las Vegas Convention Center’s West Hall also be funded.
Several gaming insiders questioned whether Strip casino operators would support another room tax increase to fund a baseball stadium, especially if it’s built in the suburbs away from Las Vegas Boulevard.
Officials from MGM Resorts and Caesars declined to comment on the A’s.
In a statement, Las Vegas Convention and Visitors Authority CEO Steve Hill said he met with the team’s leadership and appreciated the interest in Las Vegas.
“It’s great the A’s organization is considering Las Vegas for its potential relocation,” Hill said. “The rapid growth of professional sports teams and high-profile sporting events in Las Vegas have quickly catapulted the destination to become the sports capital of the world. We think it would be a great fit.”
Don Logan, president of the Las Vegas Aviators, the A’s Triple-AAA farm team since 2019, believes the stadium would find support from the Strip, even if the ballpark is built in Henderson or Summerlin. Logan, now in his 39th season with the minor league franchise, said casinos would use the A’s games to bring in customers from all over the country.
“It’s about filling rooms, and these are very sophisticated marketers,” Logan said. “The tourists will come for major league sports. It allows Las Vegas to offer more as a destination.”
At least two Strip locations are being looked at as potential stadium sites.
A spokeswoman for Treasure Island owner Phil Ruffin confirmed the A’s toured the Las Vegas Festival Grounds, a 60-acre site at the corner of the Strip and Sahara Avenue Ruffin acquired from MGM Resorts in 2019 as part of his $825 million purchase of Circus Circus.
A 27-acre location behind Bally’s Las Vegas, Paris Las Vegas, and Planet Hollywood is also under consideration, according to Kaval. The site was a potential stadium location for the Montreal Expos back in 2004. The team studied Las Vegas as a relocation possibility before settling on Washington D.C. The land is owned by real estate investment trust VICI Properties.
“VICI doesn’t comment on specific conversations,” company President John Payne said in an email. “However, our significant land bank in Las Vegas represents a compelling opportunity to widen the Las Vegas Strip along the center of gravity and we regularly study opportunities to maximize long-term value.”
Kaval said architectural designers are working up plans and conceptual ballpark designs for many of the potential sites.
Cone of silence
State and local elected leaders have toned down the initial exuberance for a baseball stadium. Many declined interview requests and sent statements through their press offices.
Gov. Steve Sisolak, one of the primary proponents behind the Raiders’ move to Las Vegas and an advocate for the Allegiant Stadium’s public financing, didn’t offer answers to questions about the A’s that were provided to his spokeswoman.
Las Vegas Mayor Carolyn Goodman said in a statement, “We have had great discussions with the A’s management, and we look forward to future talks with the team to showcase the advantages of moving to Southern Nevada.”
A spokeswoman said Henderson City Manager Richard Derrick had a second meeting with the A’s on July 8 to discuss the team’s “continued interest in relocating to Southern Nevada.” The discussions were described as “largely exploratory.”
One site in Henderson that has drawn attention includes three vacant parcels totaling 109 acres and is adjacent to the Galleria Mall and bordered on the east by U.S. 93-95. The Aviators’ Logan targeted the location for a spring training complex in the 1990s.
Aviators won’t fly away
Logan and Kaval said the arrival of the A’s would not spell the end for the Las Vegas Aviators, who have been playing baseball in Southern Nevada since 1983. Three Major League teams – Minnesota Twins, Atlanta Braves and Houston Astros – co-exist in the same cities as their top minor league clubs.
“Minor League baseball is family-oriented and price-conscious,” Logan said. “It will be a challenge because you are talking about 150 baseball games combined over six months. That’s a lot of baseball. Everyone I’ve spoken with said it’s viable.”
Logan told his staff the process for the A’s “needs to play itself out” and the team would support the effort.
The Aviators franchise is owned by Howard Hughes Corp., as is the 10,000-seat Las Vegas Ballpark in Downtown Summerlin. The stadium opened in 2019 and the LVCVA has a 20-year, $80 million naming rights deal for the facility. The stadium has been widely praised in minor league baseball circles.
But could it house the A’s on a temporary basis if a major league ballpark were in construction?
“Major League Baseball will make that decision,” Kaval said.
Manfred, the baseball commissioner who approved the Las Vegas exploration, said Tuesday’s vote “will determine (the) fate of baseball in Oakland.” However, even if the council votes in favor of the waterfront stadium, other approvals, such as the environmental impact on the site, are still needed.
“A no vote accelerates the effort in Las Vegas,” Kaval said. He noted that Major League Baseball rejected the Coliseum site.
“The league said a renovation or a new rebuild is not something that fits the future of baseball,” he said.
The A’s have spent more than three years working on the Howard Terminal location and Kaval said the site was preferred by Oakland Mayor Libby Schaaf. But the council has never taken a vote on the project. A spokesman for Schaaf did not return multiple phone messages, emails or text messages.
After Manfred’s remarks, Schaaf reiterated her support for the Howard Terminal project in a statement provided to the East Bay Times.
“MLB has once again made it clear that the only path to keeping the A’s rooted in Oakland is a ballpark on the waterfront, and we agree,” she said through spokesperson Messiah Madyun. “We are continuing to work closely with the A’s on a deal that is good for Oakland, good for the A’s, and good for our entire region.”
Update at 6:01 a.m on 7/19/2021:AB386, the bill relating to improvement districts, was vetoed by Gov. Steve Sisolak on June 10.
Las Vegas kicked off its first large-scale convention and tradeshow in more than 15 months on Tuesday when the World of Concrete took over the Las Vegas Convention Center.
The three-day construction industry conference also became the first tenant to utilize the convention center’s $1 billion West Hall, a 1.4 million-square-foot expansion that was completed in January.
Gov. Steve Sisolak, along with county and city elected officials, helped Las Vegas Convention and Visitors Authority CEO Steve Hill cut the ribbon on the expansion.
The addition of the West Hall brings the total square feet of meeting space in Las Vegas to 14 million. The Las Vegas Convention Center is now the second-largest conference facility in the country. According to the LVCVA, the meeting and convention industry represent $11.4 billion in economic impact to Southern Nevada during a normal year.
The World of Concrete attendees were also the first conference delegates to utilize The Loop, a mile-and-a-half-long underground transportation system that shuttles conference and tradeshow attendees through the Convention Center’s 200-acre campus in less than two minutes – a task that on foot takes up to 25 minutes.
The system runs 40 feet beneath the ground and was constructed by billionaire Elon Musk’s The Boring Co. for $52.5 million and utilizes Tesla vehicles.
It’s unclear how many attendees are at World of Concrete, which drew more than 50,000 to its last event in Las Vegas in January 2020.
COVID-19 sent the Las Vegas gaming and tourism market to record-setting lows in 2020. The year included a 78-day shutdown of all gaming activities. Convention and meeting attendance was annihilated by the pandemic, with the number of delegates collapsing to a little more than 1.7 million, a decline of 74 percent from the more than 6.6 million meeting attendees in 2019.
The pandemic-driven absence of international flights to and from Las Vegas has removed one of the gaming industry’s most lucrative business segments, leading airport leaders, tourism officials and gaming insiders to push for the U.S. to reopen for travel from key destinations.
Clark County Director of Aviation Rosemary Vassiliadis told members of a Senate subcommittee at a hearing Tuesday that airline operators want to resume flights into McCarran International Airport – the ninth busiest airport in North America – but are thwarted by travel restrictions affecting “nonessential” leisure and convention visitors.
“These airlines ask us point blank, ‘What is the U.S. doing to reopen travel? When will our airline be able to resume bringing vacationers and conventioneers to Las Vegas?’” Vassiliadis said in testimony before the Senate Subcommittee on Tourism, Trade, and Export Promotion. The subcommittee is chaired by Sen. Jacky Rosen (D-NV).
“Almost every day, I or members of my team hear from representatives of international air carriers expressing interest in quickly resuming service to Las Vegas,” Vassiliadis said.
Gaming industry insiders are asking the same questions.
Truist Securities gaming analyst Barry Jonas said that before COVID-19 disrupted the Strip, 14 percent of Las Vegas’ annual visitors came from international destinations.
“The resumption of international travel should be one of the key next legs for the Strip’s recovery,” Jonas said. “International visitors stay longer (and have) bigger gaming and non-gaming budgets.”
Vassiliadis suggested that the U.S. develop “a risk-based roadmap” that allows global travel to return through a more flexible approach, rather than keeping the blanket travel ban that was put into place by the White House in January.
She said the International Civil Aviation Organization, with support from the Federal Aviation Administration, has produced a manual in which global air routes could be restored, but also could be adjusted if COVID-19 surges on either end of the route.
“The EU is gradually deploying methods to reopen its members’ borders for vaccinated passengers, and the United Kingdom has embraced an approach similar to ICAO’s.” Vassiliadis said. “These actions have opened the door for U.K. residents to begin non-essential travel to select countries later this month.”
She noted, however, that the U.S. wasn’t on the list of cleared destinations, “creating a major hurdle toward reconnecting Las Vegas with its top overseas visitor market.”
From 11 down to one
In 2019, McCarran had nonstop service to and from 11 different countries, including the United Kingdom, France, Germany, South Korea, China and Israel.
“Now, that number is down to one, with Mexico representing our lone international market currently in service,” Vassiliadis said. “Over the first four months of 2021, our international volume has amounted to less than 80,000 passengers.”
In 2020, McCarran had 781,280 incoming and outgoing international passengers, a decline of 79.5 percent compared with more than 3.8 million international customers in 2019. Several Canadian air carriers had maintained routes to Las Vegas for a time, but service was halted when COVID-19 surged in Canada and the government closed its borders.
Las Vegas Convention and Visitors Authority CEO Steve Hill said he supports the roadmap suggested by Vassiliadis. The resort industry is reopening and the first major trade show in more than a year – the World of Concrete – is scheduled for next month.
“We’re ready to get back and other countries are ready to get back,” Hill said. “Frankly, waiting for the whole world to get back is just not good for anybody involved.”
Diminished gaming revenues
The loss of business from Asia has diminished revenue streams for Strip resorts that offer high-end baccarat play. The game can tip the scales along the Las Vegas Strip during Chinese New Year in the January-February timeframe and large-scale events.
Jonas said Asian high-end table game play has historically been a “meaningful contributor” to Strip casinos, estimating it accounted for roughly 5 percent to 10 percent of MGM Resorts International’s total cash flow from its Las Vegas properties.
UNLV gaming researcher and historian David G. Schwartz views baccarat as “important” to Nevada gaming and a “proxy for high-end Asian play.” Over the past decade, before the pandemic, baccarat averaged more than 10 percent of statewide gaming revenues annually.
Schwartz called the statistic “remarkable, given how small” the number of baccarat tables was compared to other table games, such as blackjack, craps and roulette.
Through March, baccarat revenues are down 45.6 percent compared to 2020, which recorded the game’s first sub-$1 billion revenue year since 2009. Revenues from baccarat hit an all-time high of almost $1.6 billion in 2013, a year that saw the state collect more $11.1 billion in gaming revenues.
“Pound for pound, baccarat tables generate far more revenue than other gaming positions,” Schwartz said. “For that to return we need to become a destination for international travelers, particularly from Asia.”
No to vaccine passports
Vassiliadis told the subcommittee that the U.S. government needs to lead the world in establishing ways to safely admit international travelers. But she stopped short of calling for a Digital Health Credential (DHC), which could be construed as a vaccine passport, for domestic travelers.
“We do need the government to set the parameters and criteria for accepting solutions that are already being implemented in other parts of the world,” Vassiliadis said. “To be clear, aviation industry members are not advocating for a DHC mandate.”
Hill agreed that “vaccinations are the key,” but that a vaccine passport was not the right strategy for domestic travel.
"But it could work with international markets,” Hill said.
Vassiliadis said the U.S. should be involved in “worldwide discussions” that would set guidelines or standards for the use of DHC in authenticating testing and vaccination status for international travelers.
“Establishing a harmonized approach for the implementation of these DHCs will allow the traveling public to understand the requirements for international travel and reduce the occurrence of fraudulent documentation,” Vassiliadis said.
Nevada tourism officials said Tuesday that their industry needed more help from Congress to recover from the plunge in business triggered by the pandemic, testifying at the first hearing convened by a new panel led by Sen. Jacky Rosen (D-NV).
Steve Hill, president and CEO of the Las Vegas Convention and Visitors Authority (LVCVA), said that the industry after the pandemic emergency subsides "will be faced with a situation that is roughly equivalent to the depths of the Great Recession."
“That will be where we are once we get past the health crisis and are just simply dealing with the economic fallout,” Hill continued.
His case was among those heard by a subcommittee of the Senate Commerce, Science and Transportation Committee. It was the new panel’s first hearing, and Rosen said there are more to come. While Congress has acted to help tourism and the economy with loans, the employee retention tax credit, direct aid to restaurants and live entertainment, and unemployment relief, more needs to be done, according to Rosen.
“Now it's time to bring this critical industry back to its pre-pandemic economic status,” Rosen said. “I intend to use this subcommittee to find bipartisan pathways and solutions to do just that.”
The travel and tourism industry could take about five years to recover from pandemic-spurred shutdowns and will need help from Congress, including passage of hospitality and tourism industry tax breaks, industry officials testified.
"That's far too long to wait," said U.S. Travel Association's Tori Emerson Barnes. She called for President Joe Biden's administration to reopen foreign travel by setting benchmarks and the Centers of Disease Control (CDC) to issue guidelines for safely holding conventions.
While domestic leisure travel will come back more quickly, international travel will take longer and federal guidelines could help ensure an expedited return, Barnes said.
MGM International Resort's Jorge Perez said that international travelers are vital because they frequent Las Vegas and tend to spend more money than domestic travelers.
“We know those customers stay longer,” Perez said. “They enjoy our restaurants, they enjoy our casinos, they enjoy our shows, they spend quite a bit on retail,” Perez said. ”So anything that we can do to reduce those barriers, would be incredibly helpful, especially for Las Vegas.”
Hill said one barometer for judging the state of the industry is the portion of the tax on hotel rooms that provides much of the LVCVA's funding.
“Typically we would receive about $300 million a year,” Hill said. “In our current fiscal year, which ends in June, we will receive about $100 million, so about a third of our normal revenue.”
“We are projecting next year that we will receive about 70 percent of our normal room tax revenue,” Hill continued. “So we will show improvement, but it's only about halfway to where we need to be over the next 12 months.”
Barnes and Perez also called for the passage of a bill introduced by Sen. Catherine Cortez Masto (D-NV) and Rep. Steven Horsford (D-NV). Known as the Hospitality and Commerce Job Recovery Act, it includes a new tax credit that would let taxpayers write off the cost of attending or hosting a convention, business meeting or trade show between 2022 and 2024.
The bill is “one of the biggest policy priorities for the travel and tourism industry,” Perez told the subcommittee.
The measure would also extend the Employee Retention Tax Credit through January 1 and would restore, for two years, the tax deduction for meals and entertainment. Congress repealed the deduction to help pay for the 2017 tax cuts enacted under President Donald Trump. Prior to the repeal, a taxpayer could deduct 50 percent of entertainment, amusement, or recreation expenses incurred for activities related to trade or business.
Also, the legislation would establish a tax credit for restaurants or food service businesses to cover the cost of reopening or increasing service at an establishment forced to close down or scale back operations because of the COVID-19 pandemic. That includes any renovation, remediation, testing or labor cost needed to prevent the virus’s spread. The credit would be effective from the date of enactment through 2022.
Another tax credit established by the bill would encourage middle-class travel between 2021 and run through 2023. The credit would be worth 50 percent of qualified travel expenses up to a maximum of $1,500 per household plus $500 for each qualifying child. The credit begins phasing out for individuals making over $75,000 per year and $150,000 for married couples.
Barnes also called for $250 million to help fund Brand USA, which markets travel to the U.S. abroad. Funding for the program comes from private donations and fees charged to international visitors registering for visas to enter the U.S.
Barnes said that Brand USA has returned $26 for every $1 spent and that the program's funding has been "decimated" by the pandemic.
“If Brand USA is unable to continue its important work, international travel recovery will be severely limited,” Barnes said.
Panel witnesses also made the case that improving the nation's infrastructure would help tourism around the country. Their comments came as Biden has put forward a $2 trillion infrastructure plan. Rosen said that the passage of the package would represent a significant opportunity to give tourism a boost.
“We have an opportunity to make investments that will revive and enhance our travel and tourism economy,” Rosen said, adding that Nevada’s airports were nearly at capacity before the pandemic.
Asked about the importance of passing the package for tourism, Hill noted that several members of the committee represent states that would be affected by improving I-15, which connects California with Southern Nevada, but is also an important road for Arizona, Idaho, Utah and Montana.
“The importance of that corridor can be seen in the makeup of this committee,” Hill said, adding that the federal government should create a national travel infrastructure strategy, similar to the freight plan unveiled in September.
Hill also urged Rosen to create a congressional I-15 caucus to help push for improving the corridor.
The vehicles streamed into the pickup lines on a recent Monday, some with popped trunks awaiting cargo.
In a North Las Vegas parking lot, they inched toward a white tent, where workers loaded brown boxes and white plastic bags filled with food into cars, trucks and SUVs. The assembly line-like operation outside the Culinary Academy of Las Vegas popped up in the immediate aftermath of the COVID-19 shutdown to help thousands of furloughed workers put food on the table.
A year later, it hasn’t stopped. Instead, the Culinary Academy expanded and began allowing all community members to access the roughly 40-pound batch of fruits, vegetables, grains and meat — complete with recipe cards — designed to feed families.
As of early March, the food assistance program had donated 11.5 million pounds of groceries, or the equivalent of about 35 million meals. On any given week about 6,000 to 8,000 vehicles roll through the drive-through-style line, and that figure doesn’t include deliveries made directly to those in need who cannot leave their homes or food distributed at smaller pop-up sties.
“I can tell you that the lines aren’t getting any shorter at all,” said Mark Scott, chief executive officer of the Culinary Academy. “...This past year is really a hole fairly wide and fairly deep for people, and it’s going to be a long time before people are able to dig out.”
But across town another pickup line was seeing equal, if not greater, activity — the passenger pickup area at McCarran International Airport. Hordes of flight-weary travelers, some donning face masks, scanned the line of cars as horns honked and doors opened and shut.
A year ago, this was not the case. The normal hustle and bustle of a busy airport had been swiftly replaced by an eerie quiet.
Now, the two pickup lines — separated by miles and purpose — nod to the region’s hopeful but challenged circumstances.
Nevada is, once again, healing, just as it did after the tourism industry was rocked by 9/11, the Great Recession and 1 October. Vaccination numbers are climbing, case numbers and hospitalizations remain relatively low and spring has brought forth not just tourists but an increasing sense of optimism about the future.
But the truth is Nevada’s healing has only ever been surface deep, its wounds still raw beneath and ready to break open at even the slightest injury.
Amid all the talk of economic diversification over the last decade, experts say Nevada has failed to invest in the necessary level of change to build a more stable economy. The memories of past economic devastation often quickly fade as Nevada once again returns to boom times and trusts the glittering lights of the Las Vegas Strip to save it.
Some would say Nevada’s close relationship with business is what gives the state an edge. When Nevada struggled to secure necessary supplies for hospitals in the early days of the pandemic, for instance, gaming and mining companies donated millions of pieces of personal protective equipment, money and other resources through the governor’s private-sector COVID task force.
But Nevada’s reliance on industry to save the day has also time and time again left the state dependent and vulnerable. At first it was mining, an industry so valuable, and powerful, that it was granted a special, favorable taxation structure when the state’s Constitution was written in 1864.
Then it was the casinos, who have so wholeheartedly opposed industry-specific taxes that they have gone so far as to support a widespread tax increase that would equally affect all larger businesses in Nevada. There was Tesla, Faraday Future, the Raiders and, now, Blockchains, all enterprises touted as the state’s next economic cure-all.
In its nearly 157-year history, Nevada has been unable to shrug off being a company town. This time, it’s put the state in the impossible position of choosing between saving its residents from COVID or financial devastation.
Now, the question is whether, as the lights on the Las Vegas Strip grow brighter, Nevada will once again be drawn like a moth to flame or whether it will truly diversify its economy while fixing a long-ailing unemployment system. The question is what the future holds for Nevada’s workers — many of them workers of color — who are the lifeblood of the economy and the first ones to suffer when good times turn bad.
The question is whether history will once again repeat itself.
The shutdown was swift.
Six hours after Gov. Steve Sisolak announced on March 17 that nonessential businesses would be required to shut their doors to halt COVID-19’s advance on the state, all gambling activity statewide ceased. It was the first time Nevada’s lucrative gaming industry had been prohibited from operating since gambling was legalized statewide in 1931.
Other quintessential Nevada businesses, including strip clubs and brothels, and other everyday establishments, such as salons, gyms and malls, were given an extra 12 hours to wind down their businesses.
The decision hadn’t come as a shock to gaming establishments, many of which had been on multiple calls with the governor leading up to the decision and some of which had already been making plans to shutter operations in light of canceled bookings and an increasingly bleak future for the tourism industry. Billy Vassiliadis, longtime Las Vegas adman, estimated there was 80 to 90 percent agreement among the resorts by the time the governor made his decision that the shutdown had to happen.
Plus, some casino operators saw what was happening half a world away and started preparing. Casinos in Macao shut down for 15 days in February last year.
“I think we could see that it was going to be a very serious matter and definitely going to affect operations based on what we had seen happen in Macao,” said Virginia Valentine, president of the Nevada Resort Association. “But I don't think anyone knew just how big an impact there was going to be or that there would be extended closures.”
More than six months earlier, the Nevada Department of Employment, Training and Rehabilitation (DETR) had carried out “economic cycle planning,” preparations that recognized a 10-year streak of economic growth would inevitably come to an end and unemployment would grow. But the domino of casino closure announcements was ominous for then-director Tiffany Tyler-Garner.
“Over time, there's this growing concern of ‘oh my gosh, yet another employer is indicating that they're putting folks on leave’ … and that all those tens or hundreds, or whatever size those businesses were, were headed our way,” she said.
The prospect of shutting down the gaming industry was more complex than it perhaps appeared from the outside. For starters, some casinos scrambled to find padlocks to secure their entryways. Locks, as it turns out, were not a standard feature in the 24-hour establishments.
Casinos also had to quickly devise plans for counting and safely storing cash, either on site or transferring via armored trucks to banks. Sandra Douglass Morgan, former chair of the Gaming Control Board, said regulators were fielding call after call from casino operators who wanted to ensure they were in compliance with all the logistical and accounting matters. At the same time, gaming properties were handling people-centric problems, such as notifying and accommodating hotel guests and standing up employee assistance programs for the wave of people facing sudden furloughs.
“If we had to do it all over again, obviously we would have said, ‘Okay, you have a week to close,’ to make sure all that information was put into place, but we didn’t at the time,” Morgan said. “But everyone was very understanding.”
State officials within the Department of Business and Industry, meanwhile, scrambled to help other businesses figure out whether they were considered essential and, therefore, whether they were required to shut down. The initial list of essential businesses Sisolak announced could remain open was specific, if incomplete: Grocery stores, pharmacies, banks, hardware stores, truck stops, daycares, gas stations and health facilities.
That left the rest of the non-casino businesses in somewhat of a grey area. Workers at the Tesla Gigafactory, Allegiant Stadium and several marijuana dispensaries reported for work as usual on March 18, unclear whether their employers would be sending them home at noon.
Clarification came that afternoon — an hour after businesses were supposed to close — in the form of a “Risk Mitigation Initiative” document, which outlined 20 essential services and sectors. Among them were ones the governor hadn’t mentioned the previous night, including veterinarian services and pet stores, laundromats and dry cleaners, and auto repair services. Construction and mining businesses were, separately, granted permission to remain open as well.
But, at the time, there was little to no federal guidance about how essential businesses ought to remain open safely to protect themselves, their workers and their customers. So, state officials hurried to come up with their own guidelines. Terry Reynolds, director of the Department of Business and Industry, said the state ended up being about two or three weeks ahead of the federal Department of Labor in the guidance it released for Nevada businesses and employees.
“Businesses can’t wait three weeks,” Reynolds said. “They need to know what they need to know quickly.”
Some of the issues state officials grappled with included how to keep small banks, which were legally required to stay open during the shutdown, running when their employees fell ill, and how to help restaurants safely pivot to a takeout model as dine-in operations closed. Reynolds said some restaurants were able to successfully shift their operations.
“Others did not shift very well,” he added. “It was very unfortunate because I think a lot of those may not come back at all.”
Echo & Rig, a popular steakhouse near Summerlin, saw a massive uptick in customers visiting its on-site butcher shop during the initial shutdown period when only takeout was allowed, chef and owner Sam Marvin said. But that alone didn’t spare the restaurant from feeling the sting of no in-person dining.
At least half the Las Vegas restaurant’s employees were furloughed, and Marvin said a loan from the Paycheck Protection Program, which was established early on in the pandemic to help small businesses make payroll, “made the difference in us surviving or not surviving.”
The restaurateur doesn’t hold a grudge against state officials. Compared with California, where he operates two restaurants, Nevada gave a much earlier green light to some in-person dining when the state started to reopen. Because of all the uncertainty surrounding the virus initially, Marvin said he didn’t disagree with the shutdown, though he acknowledges his opinion may differ from others in the restaurant industry who couldn’t hang on financially.
“How can you disagree if you don’t know better?” he said. “Better safe than sorry.”
Echo & Rig’s furloughed employees were just a small slice of the hundreds of thousands of employees who lost their jobs almost overnight, pushing Nevada unemployment to levels worse than those seen during the Great Depression. In April, more than 28 percent of Nevadans were unemployed, up from 3.6 percent in February.
Those hundreds of thousands of newly jobless Nevadans quickly overwhelmed the state’s unemployment system, which was accustomed to handling about 2,500 initial claims a week but received more than 92,000 as the shutdown began. In the past year, half a million Nevadans have collected at least one week of unemployment benefits out of a workforce of 1.5 million, and the agency has received nearly two million initial applications for benefits.
“We were in response mode, without knowing exactly what the floor or ceiling would be,” Tyler-Garner said.
DETR’s problems were numerous, including a staff that had atrophied over the past decade as the federal government drew down funding. Issues as small as a vacation payout to a claimant would trigger “adjudication,” or an analytical review, but Tyler-Garner estimates only about seven people in the agency were qualified to manage that step when the crisis hit, for example.
Early on, the federal government answered pleas to support gig workers ineligible for traditional unemployment by creating the Pandemic Unemployment Assistance (PUA) program, but Nevada officials feared that adding PUA programming into the brittle system processing traditional claims would crash it and cut off claimants already receiving benefits. They bought a separate software product to administer PUA in the name of speed and IT stability, but it created a bifurcated system that bedevils claimants to this day.
Mike Powers, a guitarist who worked for a talent agency that dispatches musicians for gigs ranging from conventions to sidewalk entertainment, is one of them. From the first day he applied to PUA, the system flagged his Social Security number as tied to another existing claim, and he believes he’s stuck in limbo a year later because someone in California filed a fraudulent application in his name.
Every day is a financial emergency, he says, but he holds out hope that he’ll someday emerge from the Byzantine system and claim the tens of thousands of dollars he believes he’s owed.
“I would hate to think that I was so close to solving the riddle and then, you know, it did not happen,” he said.
Much of the messaging from Sisolak early on was about the public health crisis at hand and flattening the curve of what was at the time an unknown and deadly virus. But to the quarter of Nevadans who were unemployed and struggling to wend their way through the bureaucratic nightmare that was the state’s unemployment system, it often felt like they were being left behind.
Joshua Meltzer, 29, worked as a singing gondolier at the Venetian and switched to the business side of live entertainment just before the pandemic hit. But a year later, he hasn’t been paid unemployment, and after months of trying to make it with the help of friends, he left the state for Minnesota and is working a clerical job to make ends meet.
He described the last year as a financial, emotional, philosophical and spiritual crisis all rolled into one. He’s always seen government as a force for great good, but its inability to help him has challenged that belief.
“I feel betrayed, in a way, by Nevada, which has been a place of … rejuvenation,” he said. “If that community doesn't take care of its own in crisis, I don't know if that can be my long term home anymore.”
Claimants have also criticized elected officials’ handling of the situation, from the governor failing to mention the unemployed in certain press conferences to formulaic responses when claimants poured out their hearts in desperate emails to their congressional representatives.
“The best thing you can do is just listen better and realize that there are people that are truly hurting,” Powers said.
Reflecting back on his public communications to unemployed Nevadans, Sisolak said he “tried to speak to their plight.” He also said he wishes the state had an “army of people” to quickly work through the hundreds of thousands of unemployment claims that poured in, noting it can take up to an hour for a state worker to process some of the more complex claims.
But, mostly, he blamed yearslong underfunding and neglect of the state’s unemployment system. During a period of record low unemployment in 2019, DETR told lawmakers that after years of successive budget cuts, it was struggling to handle its call volume and expected to be able to handle only 2,800 phone calls a week in 2020.
During the pandemic, a single claimant from Dayton reported calling DETR 2,200 times during a two-week period in April, and many others reported placing hundreds of fruitless calls a day.
“You've got a system that was basically ignored session after session after session,” Sisolak said. “Then when suddenly you're hit with a pandemic that you get claims that are 20, 25 times what you are normally getting, no system is going to work under that situation.”
To make matters worse, state officials were also tasked with sifting fraudulent claims from the legitimate ones. While DETR hasn’t quantified how many illegitimate claims were approved and how much the state paid out on those claims, they estimate they prevented billions of dollars of fraudulent payouts through blocking payment on hundreds of thousands of claims on which they couldn’t verify identity.
As of March 4, DETR reported there were 306,632 claims with pending identity issues that are suspected to be fraudulent. At least another 437,000 PUA claims were denied over identity verification issues in two rounds of mass disqualifications last year.
“The amount of fraud that was happening was unconscionable,” Sisolak said.
But a focus on fraud has had unintended consequences for claimants. Amber Hansen, an administrator of a popular Facebook group for PUA claimants, said it casts a stigma on PUA applicants “that we’re fraudulent … some of us are inherently bad.”
“We still do have people that have eligible claims, and that need to be helped,” she said. “We have to kind of move off that issue.”
Jason Guinasso, a Reno attorney who studied DETR’s backlog as a court-appointed special master last year, said the unemployment agency has erred too much on the side of trying to control fraud, and is making policy “based on the exception, not the rule.” He compared it to a department store assuming all its customers showed up to steal.
“Imagine if they ran their store based on trying to stop shrinkage, and that's all they cared about,” he said. “Your experience going to Macy's to buy a dress would be a lot different than it would be if they were running their store to cater to the majority of people [who] are not there to steal.”
The governor praised the staff at DETR, which increased the number of people working on unemployment issues threefold by January and had many staffers working overtime to process unemployment claims under immense pressure, scrutiny and even threats, including to the director of the department. But he also acknowledged the state’s shortcomings.
“Could we have done a better job? Certainly we could have done a better job,” Sisolak said.
As spring pushed toward summer and the number of people hospitalized with COVID-19 started to decline, the number of people unemployed because of COVID-19 creeped higher. Pressure mounted on Sisolak to start reopening the state’s economy. Leaders in some local jurisdictions signaled they weren’t going to wait for the governor’s lead, touting their own plans for reopening.
At the end of April, Sisolak announced the state would begin an “active transition” toward reopening that would start with some of the safest businesses, including indoor retail spaces, before progressing to the riskier establishments, such as casinos. At the time, he credited Nevadans’ “incredible discipline” in halting the spread of the virus.
The casinos had a model for reopening: Macao. Casinos in the special administrative region in China had already opened their doors again. But when they did, it was with significant capacity limits, social distancing at table games and slot machines, temperature checks and face masks. Resorts in Las Vegas could essentially take the Macao playbook, make a few adjustments for scale, and put it into practice.
Casino floors — known for their winding paths that keep gamblers wandering and shoving money into slot machines — would have considerably more elbow room. The Gaming Control Board issued a policy document in May spelling out some of the new rules of the trade.
Table games now have player limits: six people for craps, three for blackjack, four at roulette and poker tables. Some slot machines, meanwhile, were placed in an extended hibernation to make way for social distancing. Conversations also occurred around how to disinfect gaming chips without compromising their integrity.
And then there was the human aspect.
The Culinary Union lobbied hard for the approval of SB4 during a special legislative session last summer. The bill, which passed and was signed into law by the governor, shields many Nevada businesses from frivolous lawsuits related to COVID-19 — but only if the companies adhere to the strict, government-imposed health and safety protocols that prevent spread of the virus. Union officials pushed for the measure in honor of Adolfo Fernandez, a utility porter at Caesars Palace who died in June after falling ill with COVID-19.
Despite the bill’s passage, the union wants to see more done to protect hospitality workers, many of them on the front line interacting with people who have traveled to Las Vegas. D. Taylor, president of UNITE HERE, the parent organization of the Culinary Union, said he was unhappy that food service and hospitality workers weren’t prioritized higher up in the state’s vaccination schedule. Casino workers in Clark County did not become eligible for vaccines until Thursday.
He framed it as both a safety and equity issue.
“Who are workers on the frontlines?” he said, referring to the union’s membership. “They’re predominantly female and people of color.”
For Las Vegas, as a tourist destination, the focus was not only on safety but how to effectively communicate to tourists how seriously the industry was taking precautions. This wasn’t the first time the city had to pivot its branding strategy. In the years after 9/11, the “What happens here, stays here” slogan was born. In the wake of 1 October, it was, “#VegasStrong” and a message of resilience.
But the city had never had to market itself in the middle of an ongoing public health crisis. In the weeks before casinos reopened, cases had been fluctuating. In early June, right around when casinos opened, cases started to climb.
"This one, you didn't know where we were going,” said Vassiliadis, CEO of R&R Partners, the ad agency for the Las Vegas Convention and Visitors Authority. “It was like we were in this abyss, making decisions and consulting with folks with daily information that was fuzzy at best.”
The message Las Vegas ended up adopting was one that balanced safety with freedom. A weekend in Las Vegas, even with masks and social distancing, was still a lot more fun than a weekend stuck at home ordering DoorDash, Grubhub and Uber Eats.
“We didn't need to have the old Las Vegas for them to feel free,” Vassiliadis said. “They just needed more freedom than the restrictions they had been living under for the previous three months.”
There was just one catch: Sisolak didn’t announce a statewide mask mandate until 20 days after casinos reopened. While employees were wearing masks, it was up to casino patrons whether to don that extra layer of protection. In mid-June, the Gaming Control Board issued an industry notice that required patrons to wear face masks at table games if there was no barrier or shield separating the players and dealers.
Even Caesar himself — the statue version, that is — wore a giant mask in a bid to encourage others to follow suit. By the second week casinos were open, Morgan, then the state’s chief gaming regulator, said it was clear many people weren’t heeding that advice.
“It was harder for casino staff to tell people to wear masks if it wasn't mandated,” she said.
The governor’s order, issued on June 24, turned the option into a requirement. But controversy surrounding the decision spilled into gaming properties where some security officers suffered injuries after upset guests lashed out when told to wear a mask, Morgan said.
“No one should have bodily harm being threatened because you’re just doing your job telling people to comply with the mask mandate,” she said.
Pre-opening visitor surveys showed it was a “much younger and more rambunctious crowd” that was eager to return to Las Vegas, Vassiliadis said. And those surveys were borne out in reality: The crowd that first returned to Las Vegas was made up of younger, healthier people who were less concerned about contracting the virus and more concerned about busting loose after months of quarantine, and low room rates meant that some of Las Vegas’s top properties were now affordable for younger people, particularly if they stayed two or three to a room.
In the wake of its reopening, Las Vegas saw fights, shootings and stabbings on the Las Vegas Strip. In response, resorts stepped up their security and the Las Vegas Metro Police Department increased its police patrols.
“Underscoring that's not tolerated here to a lot of those visitors, I think, changed the situation rather quickly,” Vassiliadis said. “I don't think we suffered any kind of reputational long-term hit. I know we haven’t.”
At the state level, the governor’s office sought to convey to surrounding Western states the tightrope Nevada was walking by trying to balance the state’s economic and public health needs. In some ways, Nevada needed the buy-in of surrounding states so that they would keep sending their residents to Las Vegas and not blacklist the state through a travel advisory.
Michelle White, Sisolak’s chief of staff, recalled having “candid, open conversations” with other members of the Western States Pact, a compact established early on in the pandemic between Nevada, California, Oregon, Washington and Colorado, about Nevada’s difficult situation.
“We have states around us who I think were exceptional in understanding the situation that we were in … and genuinely were rooting for us to be OK,” White said. “Being able to explain that to folks and talk through that I think was really, really helpful in our efforts.”
Still, at one point in early December, California — which is home to 1 in 5 visitors to Las Vegas — issued a travel advisory encouraging residents to avoid nonessential travel to other states; it was a little less a month after Sisolak had encouraged visitors to continue traveling to the state even as cases surged in Nevada.
“If there were times where [Western states] said, ‘You know, we're concerned for our residents in a surge and so we're going to require quarantine,’ that’s an acceptable, reasonable thing to do for other leaders who are concerned about their residents. The way it was discussed, at least, was never about in response to Nevada directly,” White said. “It was more of, ‘This is a step we're going to take, this is another mitigation measure we're going to take to try to slow the spread and the surge.’”
For other businesses, reopening would bring with it a host of questions: Would employees have to wear masks? Could they hold meetings in person? What happens if an employee tests positive for COVID-19? There were also industry-specific considerations. How should salons disinfect their equipment? Could movie theaters open their snack bars? Would vehicles need to be sanitized at car dealerships between test drives?
To answer those questions and more, the state authored a series of reopening guidelines. Reynolds, director of the Department of Business and Industry, said the state got feedback on reopening plans from a number of different industries, from the Retail Association of Nevada to the REALTORS.
“In most cases, they were extremely helpful in terms of giving us perspective on what to look at and what can be done to keep things going and what we needed to do, how we need to approach things in concert with the medical advice that we got,” Reynolds said.
But businesses had to make adjustments beyond those required by the state to stay financially afloat as they reopened under strict capacity limits. Echo & Rig, for instance, added more seating in a second patio area that had previously been largely unused and trimmed its menu — from 60 to 42 items — as a cost-containment measure.
Some menu items went up in price as well to balance the ripple-effect felt throughout the supply chain. Restaurants are still dealing with changes in where they’re able to source certain food items, he said. Some of their beloved vendors went out of business.
Marvin, the restaurant's owner, was pleasantly surprised by the number of people willing to venture out and dine at Echo & Rig once it opened its doors. He’s hopeful that customers, at his restaurant and other eateries, will continue to offer them patience — knowing that things will still look and feel a bit different because of safety protocols and other changes designed to keep the businesses viable.
Once businesses reopened their doors, the next challenge was enforcement. Reynolds said state officials took a “one, two, three” approach, giving businesses guidance on how to come into compliance on their first two visits before issuing citations on the third visit.
“A lot of businesses basically just needed a little bit of training on how to do things,” Reynolds said.
To date, the state’s Occupational Safety and Health Administration has conducted about 13,000 first visits to businesses. Compliance with the state’s COVID-19 health and safety protocols is about 92 percent in Northern Nevada and 90 percent in Southern Nevada, though Reynolds noted that compliance on first visits has been 100 percent most weeks since January.
Reynolds said that of the businesses found to be not in compliance with the state’s rules, he estimates only less than 10 percent were truly thumbing their nose at the state’s requirements.
“We were tough on the front end on a lot of these businesses, but I think now we’re seeing for the last six, seven weeks good compliance overall,” he said.
And some businesses that initially seemed uninterested in complying with the state’s guidelines eventually came around, Reynolds said. About $60,000 in health and safety-related fines were issued to Walmart before it came into compliance.
“All of a sudden, corporate culture came in and started working on it very strongly,” Reynolds said. “It just took time. Once they did, it grabbed hold and they’ve done well.”
Even as businesses began to heal, Nevada workers continued to struggle.
When nonessential businesses started opening in May and the 78-day casino shutdown lifted on June 4, it didn’t have the same lightswitch effect with unemployment. There were still 285,610 people seeking Nevada unemployment benefits the first week of March — nearly one in five people in the state’s labor force.
A report by the Anderson Economic Group, which has been following the economic effects of COVID-19, described the December jobs numbers as a “continued trend of lethargic recovery.” Between November and December, the leisure and hospitality industry lost 2,000 jobs in Nevada, though gains in other industries offset that.
Only about 50 percent of the members of the Culinary Union, which represents roughly 60,000 resort employees across the state, including guest room attendants, cooks and porters, have returned to work since last year, though their work hours may not be the same. At the height of the shutdown, 98 percent of the union’s members were furloughed.
“Our industry — the hospitality industry overall — has been the hardest hit,” said Taylor, UNITE HERE’s president, said. “Now, we always see signs of life coming back in certain areas, which is great, but until people feel very safe travelling, until they feel safe with indoor dining and staying indoors, it will be challenging.”
Mary Ann Bautista is among those who haven’t been called back to their union jobs. Before the pandemic, she spent 14 years as a buffet food server at The Strat.
As a single mother with several teenagers still living in the house, she said it has been difficult to make ends meet on unemployment benefits alone. Bautista has leaned on the Culinary Academy’s food assistance program for help over the past year. She longs for the day when she can resume her job.
“This is not our fault. We didn’t do this,” she said. “This is a pandemic. We didn’t ask for this. We work hard.”
DETR Director Elisa Cafferata said when she arrived at the agency in August, there were nonstop calls from constituents needing help and a major backlog. To this day, she said the applications haven’t tapered off as much as she expected.
“We've definitely made a lot of progress. There's still a lot of hard work to do,” she said. “The thing I'm most focused on is how do we sort of pivot and help people start thinking about going back to work.”
But the employment figures also highlight a troubling trend, said Brian Peterson, director of public policy and economic analysis with the Anderson Economic Group. In Nevada, nearly 74,000 people dropped out of the labor force completely between February and December of last year. These are people who have reported not actively looking for a job in the past four weeks.
“The big question is, what are those 74,000 people doing?” he said. “Have they become discouraged? Are they planning on waiting out the pandemic? My guess is that at least some of those 74,000 folks want to have a job, but they just haven't been able to find anything.”
There is a certain optimism within the resort industry about Las Vegas’s ability to once again come roaring back as a tourist destination.
Las Vegas has already, essentially, been at the capacity allowed under the state’s emergency directives for some of the recent three- and four-day weekends, Vassiliadis said. World of Concrete is slated to be the first major convention to return to Las Vegas in June, and Cirque du Soleil is hoping to bring back its aquatic acrobatics show “O” at the Bellagio by July.
Tourism officials say the old notion of Las Vegas — a great escape in the desert where fun and freedom trump judgment — could be the very reason it will bounce back more quickly than other destinations. Sure, it might currently lack some of the traditional offerings. Nightclubs, for instance, aren’t jam-packed with partygoers on the dance floor. But the sunshine, warm weather, dining and gambling options might be enough to lure travel-hungry guests, even if other entertainment options are somewhat limited.
“People want to see family and then they want to get away, and when they want to get away, Vegas tops that list,” said Steve Hill, president and CEO of the Las Vegas Convention and Visitors Authority.
Of course, this all boils down to people’s willingness to travel. Vaccine deployment will play a crucial role boosting that confidence level, state leaders say. But the Centers for Disease Control and Prevention hasn’t exactly given would-be tourists its blessing. The nation’s top health authority recently issued guidance discouraging travel among fully vaccinated people — a point that has received pushback from some within the travel and health industries.
Plus, it’s unclear whether COVID-19 cases will remain at their current plateau or see a springtime surge as a result of the increasing spread of variants and loosening restrictions. In Las Vegas, tourism outpaced projections when casinos initially reopened last summer but then took a nosedive toward the end of the year as coronavirus cases multiplied again.
“I'm pretty optimistic about the direction we're headed in now,” Hill said. “But we didn't anticipate the extreme nature of the spikes that we saw around Thanksgiving and Christmas and how much damage that did to the economy here.”
Another variable: the return of business meetings and conventions, which boost the economy during off-peak travel seasons. There’s even hope that some conventions might return to Las Vegas in the second half of 2021 and then return during their normally scheduled time in early 2022.
The Las Vegas they return to, however, will likely look a little different. Resorts have more eagerly embraced new technologies, such as remote check-in and keyless hotel room entry. In the case of MGM Resorts, a partnership with Clorox as the resorts’ “official guest disinfectant and hand sanitizer brand” is now a selling point.
Jim Murren, former CEO of MGM Resorts, envisions Las Vegas marketing itself as the “preeminent health safety tourist destination in America” — even beyond what resorts are already doing.
“When you do that ... we rip conferences and conventions away from Atlanta and Miami and New York and Chicago and Dallas and LA,” Murren said. “If they have a choice of listening to Lady Gaga in LA versus Vegas, and we can market that it’s safer to do it here, they’re going to come here.”
There is, however, less optimism about the future beyond the Las Vegas Strip. It’s not that state officials don’t believe Nevada’s economic situation will improve across the state — they do — but they worry about the small businesses and workers getting left behind.
Lawmakers have taken steps to help, including authorizing $100 million for the Pandemic Emergency Technical Support (PETS) grant. They hope $10,000 or $20,000 cash infusions backed by federal dollars will keep thousands of small businesses alive.
“It's always easier to keep what you've got … You're so much better off doing that and trying to spur new startups,” said Bob Potts, deputy director with the Governor’s Office of Economic Development. “The recovery side of things — that has to be paramount.”
Sisolak is hopeful he will be able to work with the Legislature to fix the longstanding problems with the state’s unemployment system. A computer modernization project that could cost up to $50 million is on tap for the next few years pending availability of funding, and a “strike force” led by former Assembly Speaker Barbara Buckley made extensive recommendations for how DETR could be better prepared to scale up staffing if another crisis hits as suddenly as COVID.
“Prepare for war in times of peace,” Tyler-Garner advised. “I couldn't underscore more the need to ensure that we're always planning to strengthen our systems, because we never know what the demand might be in the future.”
But there’s also an acknowledgement among many in the state that Nevada’s problems run deeper, and that recovery cannot begin and end with Nevada’s tourism industry, or even with fixing the state’s unemployment system. The goal, they believe, has to be a long-term fundamental shift in thinking about the state’s economy. Murren, who became the CEO of MGM Resorts during the Great Recession, recalled seeing the “economic, social, mental, physical devastation of our community” because of Nevada’s reliance on one industry for a significant chunk of its tax revenue.
“Here we are again, and what did we learn? It seems very little,” Murren said. “Whenever things are doing well here in our state, there seems to be this expectation that they'll always be that way and that we should just not rock the boat.”
Tyler-Garner said before the pandemic, she had been working on how DETR would respond to problems that lurked just below the surface of the state’s illustrious unemployment rate: Wage stagnation. Jobs without adequate benefits. Dramatically higher unemployment in subgroups such as the formerly incarcerated.
“Some of the families that were already working two or three low wage jobs ... I shudder to think of what is happening to those families right now,” she said. “Those segments of our community were invisible.”
For Buckley, who runs Legal Aid of Southern Nevada as her day job and has seen the agency deal with a record of nearly 163,000 clients in 2020 in a region of a little more than 2 million, the pandemic has highlighted the need to invest further in the safety net and — deeper than that — Nevada schools.
“I think that key leadership throughout our state do recognize our shortcomings and are working on plans to change our over reliance on gaming and hospitality,” she said. “But as many have pointed out, it means more of an investment is needed in education and in our schools, to allow us to compete.”
That’s, in part, why the governor’s private-sector COVID-19 task force, which has in the last year helped the state secure personal protective equipment, ramp up testing, build out a contact tracing app and bridge the digital divide for students, plans to focus next on workforce recovery. Nevada was also one of nine states awarded up to $100,000 in grant funding through the National Governors Association to help states prepare for a post-COVID economy.
But Murren, who chairs the task force, believes economic diversification will only happen in Nevada if and when the state chooses to make a significant investment into the quality of life of its residents, including supporting education, health and safety, the elderly and homeless individuals. And he believes it will take the support of everyday Nevadans, too.
“What makes me incredibly angry is that so many people move to our state to avail themselves to our lifestyle, to our weather, to our natural beauty, to our entertainment, to what is great about Nevada, but they don’t contribute to it,” Murren said. “The will of the people seems to be that we don’t want taxes, or little taxes, or we don’t want to raise any revenue, any form of proper investment. Then, you get what you get in Carson City as well.”
Nevada’s budget was already slim to begin with, and it became even slimmer when lawmakers cut nearly a billion dollars from the state’s budget over the summer. That included hundreds of millions of dollars in spending on health care and education. Though Nevada received nearly $25 billion in federal aid in the last year, state officials felt like they were constantly worrying about how to pay for needed services.
“Nevada doesn’t have a huge safety net to provide on the best of days, and that’s the reality of it,” said White, the governor’s chief of staff. “That’s the hard reality of it.”
That reality is visible in places like the Culinary Academy’s parking lot. Its food distribution operation is called Helping Hand, and Scott, the organization’s CEO, said it’s not time to let go yet. The Culinary Academy anticipates providing food assistance to needy families through the end of the year in some form.
Scott knows community members remain appreciative.
It’s not uncommon, he said, to find notes of gratitude waiting in the vehicles’ trunks.
As Nevada grappled with the effects of the pandemic, the gaming industry’s revenue dropped to $18.3 billion in the 2020 fiscal year, down 25.2 percent from $24.5 billion in the previous year, according to a new report from the Gaming Control Board.
The 179-page Nevada Gaming Abstract, which was released Friday, included data on the revenue made from gaming, rooms, food and beverage, and other sources by the 267 casinos that earned more than $1 million in gaming revenue during the fiscal year ending in June 2020. The number of businesses represented in the 2020 report — 267 licensees — marked a decline from the 290 included in the previous year’s report.
“The 2020 Nevada Gaming Abstract reinforces what we’ve known all along – that Nevada’s economic engine and largest taxpayer and employment sector has been devastated by the continuing impacts of the pandemic,” said Virginia Valentine, president of the Nevada Resort Association, in a statement provided to The Nevada Independent.
With statewide revenue down $6.2 billion from the previous year, the gaming industry also significantly cut expenses.
Across all categories listed, payroll costs in the 2020 fiscal year decreased by approximately $215 million over the previous year. The decrease in payroll was matched by a significant loss in jobs during that same period, as the average number of employees in all departments dropped from 162,066 to 135,926.
A lightened payroll also brought the statewide general and administrative expenses down from $10.1 billion in the 2019 fiscal year to just $5.5 billion the following year. With expenses down significantly, the industry’s profit as a whole increased from $2.1 billion to $2.9 billion year over year.
Michael Lawton, a senior research analyst for the Gaming Control Board, said in an email that the increase in profit also came because of several large real estate sales recorded in the Las Vegas Strip area.
The revenue from those sales, including the sale of the MGM Grand and Mandalay Bay properties by MGM Resorts International to the Blackstone Group Inc. in a $4.6 billion deal, helped counteract the significant losses in gaming revenue.
The report also showed the significant effect that the pandemic shutdown had on the revenue made from rooms. In April 2020, only 2.4 percent of available rooms were filled at the casinos in the report, a massive drop from April 2019, when 87.2 percent of rooms were filled. With far fewer rooms occupied during the second quarter of 2020, the revenue from rooms dropped by 26.8 percent from the 2019 to 2020 fiscal year.
Casino earnings from food and beverage sales dropped similarly. Across the state, revenue from food sales was down 25.8 percent, and revenue from beverage sales was down 28.7 percent, from the previous year.
The casinos on the Las Vegas Strip were more affected than casinos in any other part of the state, as they had the largest decrease in revenue by percent from the 2019 to 2020 fiscal year, dropping 26.7 percent. However, with extra money coming in from real estate transactions, the Las Vegas Strip was also the area with the largest percentage increase in profit, with an increase of 162.1 percent compared to the previous year.
Because of that large increase and the number of major casinos in the area, the Las Vegas Strip accounted for $2.7 billion of the statewide industry’s $2.9 billion profit. In the previous fiscal year, the Las Vegas Strip accounted for $1 billion of the statewide $2.1 billion in profit.
Even as other areas remained profitable, the gaming industry in the rest of the state fared much worse, as casinos in downtown Las Vegas, Laughlin, Washoe County and Elko County all saw significant drops in profit from the 2019 to 2020 fiscal year.
The pandemic has affected the current fiscal year in a variety of ways, from the cancellation of events to capacity limits at venues to reduced travel. The next annual financial report on the gaming industry could paint a similar picture of decreased gaming revenues and low room occupancy rates.
But some are hopeful that a desire for travel and entertainment will help with the industry’s recovery this year. At last week’s Preview Las Vegas 2021, CEO of the Las Vegas Convention and Visitors Authority Steve Hill said he thinks people will likely feel more comfortable with traveling by the second quarter of 2021. Valentine also noted the importance of the COVID-19 vaccine rollout.
“A critical component of our recovery depends on the distribution and acceptance of the vaccine,” Valentine said. “The sooner hospitality employees, which represent roughly one in every four Nevada jobs, can be vaccinated, the swifter we can restore our tourism-based economy, welcome back large events and trade shows, reopen dormant businesses and bring more Nevadans back to work.”
Business experts are confident that pent-up demand for travel and entertainment will help Las Vegas’ economy recover in 2021, as COVID-19 vaccines are distributed to the population at large and restrictions are eventually lifted.
At the rate vaccines are rolling out, people will likely feel more comfortable traveling by the second quarter of 2021, according to Steve Hill, CEO of the Las Vegas Convention and Visitors Authority (LVCVA). His comments came at last week’s Preview Las Vegas 2021, a virtual event hosted by the Vegas Chamber.
A recent LVCVA survey of convention and meeting attendees who had come to Las Vegas sometime in the 15 months prior to the shutdown in March showed that 91 percent were burned out of Zoom meetings and 77 percent were longing to come back to in-person meetings and conferences.
“Our brand is still who we are, we are the place that you can come to escape and there's plenty to come escape from now. We bring excitement, we bring freedom, and people miss that,” Hill said. “But in the meantime, it's a balance between what Vegas has to offer, as well as the health and safety precautions that we're taking.”
In 2020 through November, Las Vegas visitation was approximately 17.7 million, with 1.7 million of those visiting to attend a convention. In contrast, Las Vegas welcomed 39 million visitors through November 2019, and 6.9 million of those came for a convention.
The next two years are expected to be packed with events, including the 2022 NFL Draft that was originally planned for April 2020, the NASCAR Cup Series in March (and that is expected to see full fan capacity at its September race), major UFC events and a variety of sporting events, both at Allegiant Stadium and throughout the city.
Business experts at the event also were optimistic about recently opened properties such as Circa Resort and Casino downtown, which opened in October, as well as the entertainment venue Area 15, which opened in September, and the future openings of Resorts World and Virgin Hotels.
Hill said he expects certain safety practices from 2020 to linger, such as wearing masks and not shaking hands, and said visitors may have to carry some type of credential or proof of vaccination to enter a venue or to be in a crowd.
“I think it's possible that we have passes for some period of time, but if we're going to do that, we need to get started on it, because there are really not implementable solutions for that right now,” Hill said. "I think we'll see a shift in the attitudes, but I do think that the consciousness of health will remain with us. What was polite a year ago is different now.”
The Vegas Chamber said it will focus on economic recovery by advocating during the 2021 legislative session for businesses and employment, helping businesses return to full functionality and preparing the unemployed for new jobs.
“This pandemic has caused havoc on local businesses and has caused thousands of Nevadans, our family, our friends and neighbors, to lose their jobs, some have lost their businesses and tragically in some cases, they've lost their lives,” Vegas Chamber President Mary Beth Sewald said at the event. "But there are so many reasons to be optimistic. New projects throughout Las Vegas and Nevada are creating opportunities for such a vibrant future.”
When will a COVID-19 vaccine be developed and used widely? When will it be safe to travel again? And will the federal government issue another round of stimulus checks or other financial aid?
Those are just some of the questions that people in Nevada and across the country are grappling with as the coronavirus pandemic continues into its eighth month.
They’re also questions being assessed by a different group of people: the five private-sector taxation and finance experts on Nevada’s Economic Forum, who have been given the difficult task of trying to project the state’s tax revenue over the next two years with a host of major, unanswered questions about the pandemic and associated economic factors.
During its Thursday meeting — the first since mid-June — Forum members sat through more than six hours of presentations and analysis on a wide variety of economic factors. Those included wage and income data, region-specific employment numbers, housing information, tourism trends and more.
But presenters and nonpartisan legislative fiscal analysts agreed that members of the Forum were facing a difficult road ahead in trying to accurately guess tax numbers in the midst of a global health crisis.
“I would have never thought in my career as an economist, that you'd show me an employment chart and it looks like a bird flying into a window,” Legislative Counsel Bureau Fiscal Analyst Russell Guindon said during the meeting. “To see that kind of pronounced fall, it’s just crazy.”
The five members of theForum, who are appointed by the governor and Legislature, are tasked with projecting revenues from the state’s major and minor tax sources. Members of the Forum typically approve projections by selecting one of three forecasts offered by analysts with the Governor’s Finance office, the Legislature and with Moody’s Analytics.
By law, the Forum must submit tax revenue projections to the governor’s office by Dec. 3 during odd-numbered years, which are then used to build state budget recommendations. They meet again in May of even-numbered years to issue a final projection, which is then used by the Legislature to craft the state’s two-year budget.
Though most of the meeting focused on general and region-specific economic information and indicators, members of the Forum were also briefed on the status of past tax projections.
Actual tax collections to date have slightly exceeded a revised “consensus estimate” from legislative and gubernatorial budget staff made in late June. Tax revenue is up 2.2 percent, or $88 million, from the revised June estimate, but still 9.1 percent, or $369 million, below the original Economic Forum forecast that was used to build the state’s budget.
Heading into the 2021 Legislature — which will begin in February — many of the analysts who testified on Thursday said the Forum should take a cautious outlook on the future of the state’s tax revenue sources.
Jeremy Aguero, a principal analyst with Applied Analysis, said he was “very concerned” about the state’s economic outlook heading into 2021 and 2022, as many economic models projecting a quick recovery generally relied on a COVID vaccine being developed early next year and quickly distributed over the subsequent 12 months.
While the business shutdown earlier in 2020 was economically harmful, Aguero said he is much more concerned that if a vaccine is not readily available, the main economic engine of the state — the Strip and tourism economy — will continue to lurch forward at a reduced capacity for three or four years owing to reduced domestic and international travel, as well as a greatly reduced convention market.
“So do I think it's going to be the full magnitude of what we faced over the past few months, when our economy was essentially shut down? No, I don't,” he said. “But it is the long arc of the COVID-19 crisis that keeps me up at night … we remain the least diversified economy of our size in the United States today, and the vulnerabilities associated with that are going to be problematic.”
Aguero added that the financial pressures on state and local governments are going to be “dramatic” over the next few years, and urged Forum members to be “conservative in your outlook.”
Las Vegas Visitors and Convention Authority Chair Steve Hill also had a mixed bag of news for members of the Forum. He said that driving traffic from Southern California has essentially recovered to pre-pandemic totals, but air travel numbers, room occupancy rates and overall gross gaming revenue remain significantly reduced from where they were before the pandemic.
Hill said one of his biggest concerns rests in the possibility that normal convention or meeting business will stay dormant. He said that Las Vegas in 2019 had more than 24,000 “meeting and convention” events (defined as any event with more than 50 people in attendance) that brought in more than 6.6 million people, and that failing to restore those types of events would have a major negative impact on the state’s financial outlook.
“And if we don't see improvement, a clearer path toward having those meetings, we have customers who are looking to potentially cancel or looking to actually move to a different location that does offer them the opportunity to have that meeting,” Hill said. “So that’s the situation we find ourselves in now. The decisions that we're making now are starting to affect that industry, that portion of our visitation.”
That aspect may be helped by Gov. Steve Sisolak’s decision two weeks ago to raise the state’s in-person gathering limit up from 50 to 250, with specific rules for conventions including a 1,000-person capacity limit.
Economic Forum Chair Craig Billings, who also is the chief financial officer of Wynn Resorts, agreed and said that the restoration of the convention and meeting business will play a critical role in how the state’s economy recovered.
“The dearth of both group and convention business — I think the impact on the city really cannot be understated,” he said. “It is what drives pricing power midweek. It is what drives a tremendous amount of operating leverage through the town. And employment will be unusually dependent on its return, actually.”
Overall, Nevada has recovered about 52 percent of the jobs lost during the initial partial business shutdown ordered by Sisolak in mid-March, according to economic development officials.
In a stark divide between the haves and have nots, home sales in Nevada are hot even as the state grapples with how to avoid an impending wave of evictions that is projected to affect more than a third of renters by the end of the year.
“We're seeing a residential market that is really moving counter intuitively to the broader economy,” said Brian Gordon of the economics firm Applied Analysis.
Gordon highlighted record-setting median resale home prices in Las Vegas that reached north of $337,250 in September, a stunning gain from their Great Recession trough of $118,000 in 2012 and up nearly 9 percent year over year. With just one and a half months of inventory, Las Vegas is “woefully undersupplied” with homes, he said.
Low interest rates are giving people more buying power, and many are leaving more expensive coastal areas to get more bang for their buck in Nevada. With people increasingly working remotely, they are more free to leave big cities and pursue a more desirable physical house, Gordon said.
“Everybody is now doing everything from home,” he said. “They're really not going on vacations and so people are just generally spending a lot more time in their personal residence.”
Gordon said Nevada’s mortgage default rate is about 9 percent, slightly more than the national rate of about 8 percent. Nearly 45,000 Nevada mortgages were past due in the second quarter, which is about one-third the number in default in the depths of the last recession.
If economic weakness continues another year or two, the home market could start to respond more, but Gordon said the state is better positioned now than before the Great Recession. Less than 3 percent of Nevada mortgages are underwater, compared with more than 70 percent in 2010.
“People have equity in their homes today more so than they did leaning into the last cycle, so I think that provides some level of stability as well if we start to see pricing give way,” he said.
With more equity, Nevada homeowners generally have more “skin in the game” and are less likely to walk away from their homes than a decade ago when the state experienced a foreclosure crisis. Still, the bleaker factors of the economy could catch up with the housing market in the long term.
“Do I believe that we can continue to see home prices escalate, you know, by another 9 percent on top of 9 percent over the next year or two consecutively? It seems pretty unlikely,” Gordon said. “I would imagine there'll be some sort of resetting, but that feels to me like it's even beyond the six month timeframe that I was just sort of referring to.”
The head of the Las Vegas Convention and Visitors Authority on Tuesday detailed a swift reversal in the agency’s financial projections amid the coronavirus, saying room tax revenue could fall by two-thirds during the next fiscal year.
During a meeting conducted by telephone Tuesday, the tourism agency’s board of directors approved a $79 million cut to the Fiscal Year 2020 budget, including staff layoffs and furloughs.
The pandemic, which has essentially halted tourism, makes budgeting for Fiscal Year 2021 difficult given the health and economic variables at play, the LVCVA’s chief executive officer, Steve Hill, told the board of directors. The agency had been projecting a little more than $300 million in room tax revenue collection during the next fiscal year, along with $60 million in building revenue.
Now, Hill said the tourism agency — which has been working with consulting firm Applied Analysis, local governments and industry leaders — expects only $100 million to $120 million in room tax revenue collection. He said projections within that range will likely appear on a fiscal year 2021 budget presented to the board in May.
“While we are optimistic about the future of Las Vegas, we know that the industry is going to remain closed for some period of time and fiscal year (2021) is going to be difficult,” he said.
The LVCVA Board of Directors on Tuesday authorized the agency to cut its fiscal year 2020 budget by $79 million and reduce operating expenses given the economic conditions. The board vote also ratified cost-reducing steps already taken by the tourism agency, such as eliminating performance pay for executives and management, implementing a hiring freeze, furloughing temporary and on-call staff, suspending or terminating nonessential vendor contracts, offering a voluntary separation program and deferring phase three of a convention center renovation project.
But more actions are on the horizon.
Hill said the agency has about 455 full-time employees, and of those, about 80 will be eliminated and another 270 will be furloughed. He said furloughed employees would retain their health care coverage.
“Separating people from their health insurance in this environment did not seem like the right step for us to take,” he said.
The tourism agency is notifying affected employees of layoffs or furloughs this week, Hill said, although they will be paid through April 25. The cost-cutting measures won’t go into effect until April 26.
Speaking more broadly about tourism, Hill said the agency expects “a slow start and then a gradual recovery throughout the year,” with local residents and people from markets within driving distance being the first to return. The international tourism segment, he said, will likely take the longest to recover.
“Obviously, some regions of the country are hit harder than others, so we will focus on those areas that offer the most potential early on and expand from there as flights expand and people across the country have the ability to return to Las Vegas,” he said.
Outside of making bond payments, Hill said the agency has prioritized money and support for marketing and advertising efforts as the city begins its tourism rebirth. Even if the virus resurges during fiscal year 2021, prompting another round of closures, Hill said the agency has enough money for bond payments.
“We will certainly make bond payments,” he said. “There is frankly no reasonable scenario that would cause us to not make payments or not be able to make bond payments.”
But Hill didn’t gloss over the bruising effect the pandemic will have on what had previously been sunny tourism projections.
“In February, we were excited about the direction the year was heading in,” he said. “We were set to set records in a number of different ways. By the time we got to March, we realized the coronavirus was certainly going to have an impact.”
Gov. Steve Sisolak issued a sweeping order on March 17 for all nonessential businesses, including casinos, to close as the state battled COVID-19. He then extended the closures through the end of April, and it’s unclear when those restrictions will be lifted, allowing some normalcy to return to the tourism-dependent economy.
Despite the unknowns, Hill said the LVCVA will do its part to help the Las Vegas economy in the aftermath of the health crisis. He noted that Las Vegas had seen room tax records in six of the nine months leading into this disrupted period, indicating a previously healthy demand.
“The desire to come to Las Vegas has not changed,” he said. “People can’t come right now. But there is still no place like Las Vegas.”
Hill also told the board of directors that two projects — the Las Vegas Convention Center expansion and the underground tunnel transportation system — remain in progress and on schedule.