We all know business in the gaming sector is tough, as it is for most consumer discretionary industries. Unlike the regional markets, Las Vegas is getting smacked around on two fronts. Visitation is down huge, but so is gaming revenue per visitor. In fact, the downward trajectory in gaming revenue per visitor is greater. Not to throw salt into the wound but this analysis excludes plummeting room rates, which is a much higher margin revenue source than gaming.
As the following chart shows, the year-over-year changes in win per visitor and total visitation tracked each other pretty closely until to the boom years in the middle of the decade. No doubt fueled by the positive wealth effect of skyrocketing housing prices, customers spent like drunk sailors not only in the casino but on room, food & beverage, retail, and entertainment. The planes and rooms were already full, so casinos jacked up room rates, table betting minimums, ticket prices etc, and they tightened the slot odds. All of this contributed to inflated spend per visitor.
We’ve got a long way to go before this bubble completely deflates. It’s payback time for the consumer.
As the following chart shows, the year-over-year changes in win per visitor and total visitation tracked each other pretty closely until to the boom years in the middle of the decade. No doubt fueled by the positive wealth effect of skyrocketing housing prices, customers spent like drunk sailors not only in the casino but on room, food & beverage, retail, and entertainment. The planes and rooms were already full, so casinos jacked up room rates, table betting minimums, ticket prices etc, and they tightened the slot odds. All of this contributed to inflated spend per visitor.
We’ve got a long way to go before this bubble completely deflates. It’s payback time for the consumer.
The spending bubble is deflating
