The company believes that its four year path to recovery is “slightly better than the last recession.” Fitch Analysts Alex Bumazhny, Colin Mansfield, and Connor Parks are predicting Strip GGR will be down 60% this year, 50% next year, and 20% in 2022, compared to the level of revenue earned in 2019.
“A full recovery to pre-pandemic levels is not expected until 2024. The Las Vegas Strip will experience the slowest recovery relative to other major gaming markets and segments globally,” they said.
Not one exhibition or conference has been held on The Strip for five months with some scheduled early in 2021 cancelling or postponing already.
“The convention business, which has begun experiencing first half of 2021 cancellations, hinges on participant and employers’ comfortability levels with larger-scale events,” Fitch wrote. “Positively, the 50-person cap on groups was eased on October 1, with larger venues of 2,500-person capacity or more allowed 10% occupancy under certain protocols.”
“Easing of group restrictions is a positive,” the Fitch analysts added. “But we don’t envision a material improvement in air capacity or consumer comfortability with flying until a widespread (COVID-19) health solution is present (e.g. vaccine, antiviral drugs), consistent with Fitch’s global airline group’s expectations.”
“Currently, visitors from China are still restricted from entering the U.S., with no known timeline for easing, representing further challenges for operators with meaningful baccarat business.”
This has a direct impact on revenues generated by high-end baccarat, which equates to a 16% share of The Strip’s gaming revenues. Most Strip casinos have now reopened, current capacity limits are set at 60% with midweek generating just half that capacity, prompting some such as Encore to close Monday to Thursday.
“Midweek remains extremely challenging, given the lack of convention business,” the Fitch analysts explained.
In comparison to The Strip, Fitch believes regional casinos will have recovered back to pre-pandemic levels by 2023 with a 15% decline from 2019 levels for the 2020 Q4 and a 10% fall in 2021.
Source: GMB / G3 Newswire