VICTOR JOECKS: An overlooked factor in Las Vegas’ high prices

While tourists complain that Las Vegas doesn’t offer enough value, casino profits have declined. This paradox has a simple explanation.

Las Vegas tourism is down. Airline traffic and visitor volume have dipped. Online complaints are way up — or at least getting much more attention. The viral moments Las Vegas wants don’t include people posting about a $26 bottle of water. One positive indicator is that gaming revenue is up. But even that seems to confirm the narrative that Las Vegas is primarily catering to wealthy whales and doesn’t value regular tourists.

This has locals nervous. For all the decades of talk about economic diversification, tourism still drives the Las Vegas economy. High home prices are a major problem. For many residents, a 60 percent drop in home prices over two years because of an economic collapse would be far worse.

The blame game has already started. Ted Pappageorge, who leads the Culinary union, has dubbed this the “Trump slump.” Pappageorge says the president’s immigration crackdown is behind a decrease in visits from Southern California. Some locals blame tariffs.

If deportations and tariffs were the cause of the tourism slowdown, then things would be especially bad in Florida. Gov. Ron DeSantis has been extremely aggressive in supporting Trump’s anti-illegal immigration policies. Neither Alligator Alcatraz nor tariffs kept tourists away from Florida. It just set a record for second-quarter visitation.

Clearly, the problem is something more specific to Las Vegas — like its high prices. Plaza CEO Jonathan Jossel recently talked about a tourist paying $33 for a coffee and bagel. “We’ve got to fix that, as a community,” he said.

Many people blame greedy corporations for increasing costs. That’s especially true for things such as resort and parking fees, which feel like a rip-off. Companies want to make money, but this story is more complicated.

Casinos are collecting more money, but they’re earning less. In fiscal 2022, Nevada’s largest casinos made $4.13 billion on $26.3 billion in revenue. That’s a profit margin of more than 15 percent. Impressive. In 2023, this dropped to $3.44 billion and a profit margin of 11.5 percent. Still good.

But last year, Nevada casinos made $2.6 billion on $31.5 billion in revenue. That’s a profit margin of around 8.3 percent. It will likely be lower this year.

So where’s the money going? Higher interest rates and rents are part of it. But so are higher labor costs. In 2023, Pappageorge bragged about new union contracts that included a 10 percent first-year pay increase. Including benefits, average worker compensation was projected to go from $26 an hour to $35 in 2028.

Destructive union demands have bankrupted companies before. There’s significant evidence that the Culinary’s current contracts are contributing to price hikes that are damaging the Las Vegas brand.

If Pappageorge wants to boost Las Vegas visitor volume, he should stop blaming Trump and look in the mirror.

Victor Joecks’ column appears in the Opinion section each Sunday, Wednesday and Friday. Listen to him discuss his columns each Monday at noon with Kevin Wall on AM 670 KMZQ Right Talk. Contact him at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.