Despite an easy comparison – slot hold % was abnormally low last year – Strip revenue may decline in the mid-teens in August based on an ugly 10% passenger drop at McCarran Airport.
McCarran airport announced that August passenger traffic declined 9.8% year-over-year. We’ve run our model and conclude that, assuming normal table and slot hold percentages, Strip gaming revenues will have declined 16% when Nevada releases the monthly figures in two weeks. A decline of this magnitude is not pretty under any circumstances but considering that slot hold percentage in August of 2008 was only 5.9%, well below the typical 7%, the 16% drop is particularly telling. As a result of the slot hold delta, slot revenue declined 15% on a volume decline of only 3.5% last year.
The chart below provides our projections. We expect slot and table volumes and table revenues to each decline over 20%. The only bright spot will be slot revenue which we believe will fall by only 8%. The August downturn is exacerbated by this year’s calendar when most of the Labor Day weekend fell in September of this year versus August of last year. If we’re right, August could be the worst performing month since February when Strip gaming revenues fell by 23%.