The focus of Nevada’s gaming industry today will be whether the state breaks its all-time November revenue record of $1.32 billion, thanks to the Las Vegas Grand Prix. Looking ahead, the University of Nevada Las Vegas economics professor said the state faces declines in gaming revenue, visits and hotel occupancy in 2024 in the event of a recession, but is well positioned to weather it through sporting events.
Stephen Miller and the UNLV Center for Business and Economic Research released year-end economic forecasts for Las Vegas and Southern Nevada that tend to be conservative in their analysis amid the potential for a recession. Economists expected this to happen in 2023 with higher interest rates, but they were proven wrong in light of strong GDP growth and a booming stock market. Inflation has fallen and the Fed has signaled interest rate cuts in 2024.
The National Association for Business Economics polled economists, and 76% of them expect the chances of a recession next year to be 50% or less. Bank of America expects a soft landing rather than a recession, slowing growth to 4.9% in the third quarter of 2023.
According to Miller, the Center for Business and Economic Research at UNLV does not expect a recession, but Las Vegas and Southern Nevada are at risk if a recession occurs, as some predict.
“Las Vegas is still very niche in entertainment and hospitality, which has suffered greatly during the pandemic recession,” Miller said. “When times are good, we also tend to feel them more than others. With more professional sporting events coming to Las Vegas, there is more upside than downside in 2024. The Grand Prix and Super Bowl are likely to set records in Las Vegas, helping to reinforce any softness we saw in the first half of 2023.
Las Vegas will get a shot today when the Nevada Gaming Control Board releases its gaming numbers on the Strip. The race was expected to generate revenue on one of the slowest weekends of the year just before Thanksgiving. The industry won’t report earnings until late January and early February, but MGM executives have already said it was a record weekend for hotel revenues and likely a record for the month.
In 2024, with a recession likely, Miller expects visits, which grew 5.8% in 2023 through October, to decline 2.3% before increasing 2.1% in 2025.
While statewide gaming revenues were up 3.3% through October, Miller said they could decline 6.1% in 2024 if a recession hits, before increasing 0.1% in 2025. Hotel occupancy, which was up 5%, could decline In Las Vegas through October, it was 2.6%. Before rising by 1% in 2025.
“This year was good, so you can have a negative year after a good year,” Miller said. “Our model is good in the short run, but we could certainly be wrong. We expect a slowdown in the national economy, although ours is not very large. The Fed expects growth of 2.5% or more in 2023 and growth of 1.5% next year.” We were asking for a soft landing, but we could see a recession if things don’t go well. Consumers are not as strong as they were, but they are still in a very good position.
Despite these odds, Miller remains optimistic about the casino industry’s prospects without a recession, although it may see a decline if there is a slower economy as the Fed has predicted. Miller noted that Las Vegas has not yet reached its 2019 peak in terms of visits, before the pandemic.
“Absent a new wave of the mutant coronavirus and a financial crisis that leads to a recession, and assuming a resolution to the war in Ukraine and limited global reach of the Israel-Hamas conflict, Southern Nevada’s economy and local tourism sector will continue to improve,” Miller said, “expanding somewhat in 2024.” And through 2025.” “We have several major sporting events that will help keep Las Vegas at the forefront and a hub for business, entertainment and international travelers.”
That includes the Super Bowl in February at Allegiant Stadium, the Raiders’ season in the fall, and the second annual F1 race next November. Miller also pointed to the December openings of the Fontainebleau Las Vegas and Durango Casino & Resort hotels as economic positives.