For the gaming industry, McCarran Airport data is the first import metric to be released. Historically, the passenger data has proven to be a very powerful and statistically significant predictor of Strip revenues. The first chart displays the high correlation between slot handle and air passenger traffic. I’ve developed a quantitative model to predict slot, table, and RevPAR growth based on the enplaned/deplaned McCarran Airport passenger data released well in advance of the other metrics. I will report my estimates on a monthly basis soon after the passenger data comes out.
  • On Friday, the airport announced that July passenger volume declined 8.6%, the largest monthly decline since 2002. Assuming normal hold percentages (luck factor), July gaming revenues will likely decline at a faster rate. Last July (2007), the casinos held above normal on both slots and tables. This factor is likely to exacerbate the overall decline. As can be seen in the second chart, I calculate slot and total volume could decline 5% and 4%, respectively. However, total revenue could fall 12% due to the above average hold percentages last year.
  • For those math enthusiasts, my model’s predictive power is very high. While I have no way of predicting luck, the McCarran monthly passenger variable explains 68% of total gaming volume (aka handle or drop). Barring another month of good luck on the tables, July gaming revenues are not likely to look pretty when they are released in 2-3 weeks. Coming soon, I will put my modeling skills to work on room rates. This profitable revenue driver is likely to look even worse.
Correlation between Strip slot handle and air passenger traffic of 0.89
Revenue declines likely to exceed air passenger drop