U.S. casino visitations in January slid downward 2 percent compared to December, and fell 33 percent compared to December 2019 as measured by foot traffic. The traffic expects to turnaround.
“The omicron strain of Covid-19 likely hampered foot traffic in early January as consumer sentiment may have temporarily declined in the near term,” said David Katz, an equity analyst with Jefferies Equities Research. “However, with declining cases, we expect trends to improve through 2022. Although 2021 attendance was meaningfully lower than 2019, we continue to believe there remains a second leg of recovery for consumer demand, supporting our broader bullish stance on casinos.”
“January volume remained 33 percent below 2019 levels, likely the result of diminished international visitors.” Convention and group business was also sluggish, but casinos expect the business to grow in the latter half of 2022 and into 2023.
For Las Vegas locals market volume fell 40 percent compared to January 2019 and off 9 percent from December, Katz said.
Foot traffic dropped in the rest of Nevada from 2019 figures but had a mixed bag in comparison to December: Laughlin up; Reno down, Lake Tahoe also up from December.
In Kentucky, several openings skew performance relative to 2019, but Katz noted that foot traffic compared to 2020 is down 27.5 percent. January traffic increased 5.5 percent over December.
Gaming revenue in Ohio and Illinois for January fell double digits compared to December.
“Some omicron impact started in mid-December, but business largely recovered by the end of January,” Katz said of Penn National and Boyd Gaming. “Margins are slightly weaker versus second quarter and third quarter, but still elevated versus pre-Covid and should be sustainable going forward. Penn Interactive’s (adjusted earnings) loss is better than expected, with a clearer path to profitability that should provide some support for valuation.”
“In our expert’s view, it should take about two years for the new workforce to reach the pre-Covid skill level, which is particularly relevant for those who are responsible for hotel operating costs and execution,” Katz said.
