When Las Vegas casinos reopen in a couple of weeks, they’ll have their work cut out for them, trying to ramp up business in a pandemic-weary world.
MGM Resorts International, the Strip’s largest operator by number of properties (13), acknowledged as much with an announcement May 18 that after four years, it’s scrapping its parking fees. The Cosmopolitan quickly followed suit, and Caesars Entertainment took a tentative step in the same direction, saying it will eliminate the fees at Caesars Palace and the Flamingo, the first of its eight resorts slated to reopen.
Caesars will do away with self-parking fees only, but industry expert Steve Gallaway expects it’s just a matter of time before Caesars is compelled to follow MGM’s lead and eliminate valet parking fees as well.
“I don’t know how they don’t,” he told GGB News. “Are you going to be the only operator on the Las Vegas Strip that’s charging parking fees?”
Probably not. With the post-Covid hangover likely to keep tourism and MICE-related air travel down for some time, the drive-in market𑁋which accounts for around half of all visits to Vegas, bus trips included will be more important than ever.
There are also the locals to consider. About 1.8 million adults live in the Las Vegas Valley, and support a multibillion-dollar industry of neighborhood casinos. They tend to avoid the tourist traps and the tourist prices on the Strip. Anything operators can do to entice more of them through the doors would be a good thing as well.
“Operators are going to be looking to remove any and all barriers and obstacles they think they might encounter,” said Brent Pirosch, director of gaming consulting services for CBRE’s Global Gaming Group in Las Vegas. “They’ll be looking at all aspects of their business, looking at what they do and figuring out what they can do better.”
Gallaway, founder and head of industry consultants Global Market Advisors, says it’s time for some soul-searching as the Strip ponders its future in the new normal, whatever that turns out to be. In areas directly affecting the visitor experience𑁋like resort fees, the cost of food and drink and front-line service𑁋the value proposition isn’t what it used to be, in his view.
“I really, truly believe that for the Las Vegas Strip to grow in the future, they have to adjust their prices, they have to return to a focus on the customer and become competitive again with non-gaming destinations.”
He says charging for parking particularly fails the value test, not because the practice is unique to Las Vegas, which of course it isn’t, but because in Las Vegas it’s unnecessary. There’s plenty of space to park on the Strip, so attaching a premium to it strikes the consumer as a cash grab.
“It had nothing to do with supply and demand,” he said. “It was just the operators identifying another way to squeeze money out of the customer’s pocket.”
Stifel Nicolaus analyst Brad Boyer agrees, at least in spirit. As he told GGB News: “You need to create experiences that people can’t get anywhere else. It’s true there’s nothing like Las Vegas. But they’re going to need to do something to drive demand. They have to get back to basics, which is the leisure traveler.”
He sees the post-shutdown era as a “prime opportunity” to walk back a certain corporate “vision,” as he termed it, “where basically what you’re doing is cutting costs, cutting costs, cutting costs and jamming the consumer on the other side—then telling your investors you’re growing.”
Free parking is one small step. But it’s one Gallaway heartily welcomes.
“I was happy to see the release about MGM,” he said. “I really hope that it’s the beginning for how operators plan to reopen these properties by thinking about how they can start giving some value back. I think they’re recognizing they need to adjust their business model.”
