weather icon Mostly Cloudy

Las Vegas economy riding high until coronavirus outbreak

Updated March 15, 2020 - 12:17 pm

Just a few weeks ago, Las Vegas’ economy was riding high.

After years of clawing back from the gutter of the Great Recession, locals could point to billions of dollars’ worth of real estate projects. Tourism numbers were strong, the unemployment rate kept tumbling, and the housing market, after slumping in 2019, blasted off with huge boosts in sales totals to start the year.

But then the coronavirus hit — and with Las Vegas and much of America rapidly shutting down to contain the spread, Southern Nevada is starting to feel sharp economic pain.

Job losses are about to start climbing. Casino giant MGM Resorts International told employees Friday that business demand has “decreased significantly,” that it has suspended operations of all nightclubs and dayclubs, that its spas and salons will suspend operations Monday, and around 150 food and beverage outlets will close Monday, according to a letter to the company’s workforce that was obtained by the Review-Journal.

Furloughs and layoffs will start next week, said the letter from MGM Resorts President and Chief Operating Officer Bill Hornbuckle.

Overall, people are quickly cutting back on air travel and big gatherings over fears of the virus, threatening the bedrock of Las Vegas’ economy: a place where tourists and conventioneers fly in from around the country and world to gamble, party, eat, shop and network, sometimes elbow-to-elbow.

It’s too early to tell exactly how the coronavirus will affect Southern Nevada’s real estate industry. That probably will hinge on several factors, including if there are widespread job losses, if lenders cut back on funding future projects or if the overall economy starts spiraling, prompting developers to pull the plug on their projects.

At least one thing is certain: You can’t overstate how important tourism is to Las Vegas and to its housing market, given all of the people across the valley who work in the industry, supply it or otherwise feed off it.

Financial effects

According to a report by consulting firm Applied Analysis for the Las Vegas Convention and Visitors Authority, visitors spent $34.5 billion in Southern Nevada in 2018, directly supporting more than 234,000 tourism jobs.

Las Vegas’ lucrative convention business already has taken several body blows the past few weeks. As of Friday afternoon, organizers had pulled the plug or shelved at least 23 conferences, comprising an estimated 424,600-plus attendees, a running tally maintained by the Review-Journal shows.

The coronavirus, which causes a respiratory disease known as COVID-19, is known to have infected a fraction of the local population and U.S. at large. But it has spread around the globe, sparked fear and hoarding and led to tidal waves of canceled events and other closures.

Ken Simonson, chief economist for the Associated General Contractors of America, was in Las Vegas this week for his group’s annual convention, held at the Bellagio. He said Friday that he was constantly asking if contractors were experiencing any spillover effects of the virus.

None said they had, but there were plenty of reports of other people facing delayed or unavailable materials or products coming out of China and Italy, which have the most and second-most confirmed coronavirus cases, respectively, as tracked by Johns Hopkins University.

‘Unnecessary risk’

Simonson expects real estate projects in the pipeline around the U.S. to get shelved or nixed altogether.

He figures commercial development might be “more vulnerable” than the homebuilding market, as low mortgage rates could spur more house sales. But would-be homebuyers might have been hit by the stock market turmoil or are now worried about their jobs, he noted.

Simonson’s upcoming work schedule, meanwhile, also shows why Las Vegas’ economy could be in for a rough, if not brutal, stretch.

He travels regularly for work, but all of his business trips in the next several weeks, and the events he was supposed to speak at, have been canceled.

Frankly, he said, he’s relieved.

“It’s an unnecessary risk to bring a lot of people into close proximity,” he said.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Nevada construction continues as coronavirus spreads
When Gov. Steve Sisolak ordered Nevada businesses closed, he let construction workers stay on the job, deeming homebuilding and other construction “essential” lines of work.
US weekly jobless claims soar to record-breaking 3.28M - VIDEO
The U.S. Department of Labor released the shattering numbers on Thursday. Jobless claims had been as low as 282,000 the previous week. The 3.28 million jobless claims for last week is more than double the 1.5 million new claims that analysts were expecting. (Las Vegas Review-Journal)
Worker at Allegiant Stadium tests positive for COVID-19
Construction of Allegiant Stadium is unlikely to affected by the coronavirus outbreak that is having an impact on just about every industry across the Las Vegas Valley. (Michael Quine/Las Vegas Review-Journal)
Casino companies burning through millions daily
RJ reporter Bailey Schulz talks about how much Las Vegas Casino companies are losing and how the Emergency bill could help if they run out of money or need help recouping what was lost.
Albertsons, Walmart, Amazon increase pay amid coronavirus impact - VIDEO
Grocery stores and other retailers have raised employee pay as they work to meet customer demand during the coronavirus pandemic. (James Schaeffer / Las Vegas Review-Journal)
Las Vegas police tells nonessential businesses to respect the shutdown - VIDEO
The Las Vegas Metropolitan Police Department reminds businesses in Clark County that all nonessential businesses are to be shut down as mandated by Nevada Gov. Steve Sisolak, due to the coronavirus crises. (Las Vegas Metropolitan Police Department)
Amazon Prime delays are now as long as a month - VIDEO
As of Sunday, many nonessential items ordered with Prime delivery are showing an April 21 delivery date. (Las Vegas Review-Journal)
Fed announces unprecedented actions to stabilize markets - VIDEO
The Federal Reserve announced several new measures on Monday. Among the announced programs is a further commitment of $300 billion "supporting the flow of credit" for Main Street businesses. (Las Vegas Review-Journal)
Lee’s Discount Liquor stores close on Sunday - VIDEO
Lee’s Discount Liquor stores across the Las Vegas Valley closed at 3 p.m. Sunday, March 22, the company announced on Twitter. (Las Vegas Review-Journal)
Local Businesses Message To Customers After Closing - Video
Local movie theaters and stores leave signs on their doors for customers as businesses close after being ordered to shut down.
Valley businesses react to mandatory order to shut down - VIDEO
All non-essential businesses in the Las Vegas Valley have to shut down. We spoke with store owners who would remain open for the benefit of the community and others who were still confused as to why they had to close. (James Schaeffer / Las Vegas Review-Journal)
Nevada casino closures impact 206K workers, AGA finds - VIDEO
About 206,000 direct casino employees in Nevada are without work after Gov. Steve Sisolak’s Tuesday mandate, according to the American Gaming Association. (James Schaeffer / Las Vegas Review-Journal)
More Las Vegas Valley grocery stores offer early hours for seniors - VIDEO
A growing list of Las Vegas Valley retailers are offering special shopping hours for seniors in light of the COVID-19 pandemic. (James Schaeffer / Las Vegas Review-Journal)
Nevada casinos closing for 30 days following state order - VIDEO
Gov. Steve Sisolak’s unprecedented order on nonessential Nevada businesses will shut down 440 licensed casinos. (James Schaeffer / Las Vegas Review-Journal)
Wynn CEO and Dr. Rebecca Katz go over coronavirus - Video
The Wynn CEO Matt Maddox and Dr. Rebecca Katz give a warning about the coronavirus in Las Vegas and around the world.
The Bellagio casino floor cleared as guests get ready to leave hotel - VIDEO
The Bellagio casino floor cleared as guests get ready to leave hotel (James Schaeffer / Las Vegas Review-Journal)
Tourists upset with MGM Resorts' lack of closure notice - VIDEO
Tourists like David and Emma Walker, who are visiting from Scotland, found out about MGM Resorts' property closures through Google, instead of the Luxor where they are currently staying. The Walkers are upset with how MGM has handled the situation by not making their customers aware of the closures first. (Cassie Soto/Las Vegas Review-Journal)
All Las Vegas MGM casinos, hotels to temporarily close - VIDEO
MGM Resorts International announced Sunday it is temporarily suspending operations at all Las Vegas properties “until further notice” effective Tuesday. (James Schaeffer / Las Vegas Review-Journal)
Caesars begins layoffs during coronavirus crisis - VIDEO
Documentation obtained by the Review-Journal shows Caesars Entertainment Corp. has begun laying off employees amid reduced travel demand from the coronavirus pandemic. (James Schaeffer / Las Vegas Review-Journal)
Traveling through Las Vegas airport during coronavirus pandemic - VIDEO
Passengers travel through the McCarran International Airport in Las Vegas on Thursday, March 12, 2020, amid concerns of the coronavirus pandemic. (Las Vegas Review-Journal)
MGM Resorts to temporarily close buffets amid coronavirus fears - VIDEO
MGM Resorts International will temporarily close its Las Vegas buffets, effective Sunday amid growing coronavirus fears. (Al Mancini and James Schaeffer / Las Vegas Review-Journal)
Las Vegas home prices break bubble-era record - VIDEO
After more than 13 years, Las Vegas house prices have finally eclipsed their bubble-era peak. (James Schaeffer / Las Vegas Review-Journal)
Tourists in Las Vegas share their concerns over coronavirus - VIDEO
Tourists share their concerns over coronavirus while they are visiting Las Vegas. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Las Vegas casino shares tumbling as coronavirus fears grip markets - VIDEO
Las Vegas-based casino operators’ shares tumbled Thursday morning along with other stocks as financial markets reacted to the rapid spread of the new coronavirus. (James Schaeffer and Bailey Schulz / Las Vegas Review-Journal)
Heavy traffic expected for CONEXPO next week in Las Vegas - VIDEO
Heavy traffic is expected in the area surrounding the Las Vegas Convention Center next week as 130,000 attendees flock to a pair of trade shows. (James Schaeffer / Las Vegas Review-Journal)
Many Las Vegas conventions proceeding despite coronavirus fears - VIDEO
While the upcoming Adobe, ASEAN, Atmosphere, and NXT conferences have been canceled due to the spread of coronavirus, many other upcoming conferences in Las Vegas are still scheduled as planned. (James Schaeffer / Las Vegas Review-Journal)
Watch Las Vegas construction boom change the city skyline
An aerial look at the changing landscape in Las Vegas construction over the past year.
Raiders sell and lease back headquarters - VIDEO
RJ reporter Eli Segall talks about the numbers behind the sale and lease back of the Raiders headquarters in Henderson and why businesses make these types of land grabs. (Renee Summerour/Las Vegas Review-Journal)
Details on MSG Sphere crawler crane - VIDEO
The world’s fourth-largest crawler crane has arrived to begin work on the MSG Sphere at The Venetian. (Renee Summerour/Las Vegas Review-Journal)
Massive crane arrives at MSG Sphere site for upcoming heavy lifts - VIDEO
The 869-ton, 580-foot-high DEMAG CC-8800, the world’s fourth-largest crawler crane, has arrived in Las Vegas to begin work on the MSG Sphere project. (Madison Square Garden and Michael Quine/Las Vegas Review-Journal)
Las Vegas land prices up more than double from recession

Investors paid a median of about $383,840 per acre last year for Southern Nevada land, up more than double from the depths of the Great Recession, according to figures from John Stater, Las Vegas research manager at brokerage Colliers International.