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‘We’re not recession proof’: Lessons learned by Las Vegas during pandemic

Updated June 7, 2023 - 6:32 pm

Las Vegas’ world-renowned tourism, hospitality and gaming sector learned a valuable lesson during the COVID-19 pandemic, said Diana Bennett, the chief executive officer of Paragon Gaming.

“Las Vegas always used to be considered recession-proof,” said Bennett, also a co-founder of Paragon Gaming and a second-generation casino operator. “Because it seemed like when it was a bad time, people wanted to gamble more than they ever did. And I’ve seen over our past 20 years here, that’s just not true.”

Bennett was one of four panelists discussing what has been a tumultuous few years for the Las Vegas market during a forum Wednesday at Caesars Palace hosted by the National Association of Real Estate Editors. Other panelists were Michael Parks, executive vice president for CBRE Group, Stephen Singer, chief financial officer for Fontainebleau Las Vegas, and Terrence O’Donnell, the vice president and assistant general manager for Caesars Entertainment. The panel was moderated by Las Vegas Review-Journal Investigative Reporter Eli Segall, who is also vice president of the real estate organization.

More than three years ago, the global economy was rocked by the unprecedented pandemic that dried up the Strip corridor almost overnight. Casinos and hotels turned into ghost towns because of COVID measures designed to stem the spread of the virus, and revenues dropped dramatically.

But the Strip is undergoing a new wave of development, business, events and rebranding in 2023, and all four panel members keyed on this year as a pivotal year for Las Vegas. Acknowledging that high interest rates are still hurting construction costs and pinching the wallets of guests, with high inflation, the panelists noted several events that could help the sector get its groove back:

The Vegas Golden Knights are in the Stanley Cup Final, the F1 Las Vegas Grand Prix will be making its debut this November, and in February, Allegiant Stadium, the home of the Las Vegas Raiders since 2020, will host Super Bowl LVIII.

Parks said that looking back, there was still some good news that came out of the pandemic. He said the industry was brought to its knees but not knocked out entirely.

“Not one operator under us missed a rent payment,” he added. “So rent was continuing to be paid during the worst parts of the pandemic.”

Singer said Las Vegas is still making its way out of the pandemic when it comes to financial numbers. However, it appears the worst is over, and there is a sense of cautious optimism in 2023.

“Visitation is still slightly below where we were pre-pandemic,” he added. “But we have seen an incredible resiliency from the customer.”

Fontainebleau Las Vegas is expected to open this December across the street from Circus Circus. The project, which was started back in the mid-2000s, has had more than its fair share of setbacks, including bankruptcy proceedings, ownership changes, and construction halts.

Singer said this is all hopefully in the past as the developer puts the finishing touches on the hotel.

“We’re very excited to finish off what is the last investment left over from the financial crisis,” Singer said. “That building has been there for a long time, and there were a lot of rumors about what it could be, what it wasn’t and whether or not it needed to be torn down. So we’re incredibly excited to open the doors and show people what it has become.”

New developments bring new challenges and new players trying to bite into the market share on the Strip. O’Donnell said he’s not worried about the recent surge of activity in and around the area. In fact, he welcomes it.

“As far as we are concerned, growing the market is the top priority,” he added. “And new development provides us the chance to reinvent ourselves at the same time.”

A new player into the world of casinos is the city of New York, which recently opened the bidding process for three casinos. All four panel members said they don’t feel threatened by the East Coast expanding its casino footprint, and welcomed the diversification and expansion of the gaming and tourism industry across the U.S.

“I think this would be a different story if there was a casino opening in downtown Los Angeles,” Parks said, “because that is where we get the most of our out-of-state visitors, from California.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com or 702-348-3967.

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