The Consumer Electronics Show (CES), historically the biggest trade show in Las Vegas, ended early this year due to concerns about Covid-19. Jefferies Equity Research said Covid and the omicron variant could cause could be more bumps on the road to recovery for Vegas.
CES was scheduled to be held January 5-7 but ended after the second day due to the pandemic. According to CDC Gaming Reports, the show attracted 40,000 in-person attendees but was a disappointment given hopes for recovery, and the return of tourists to pre-pandemic levels. CES drew 170,000 participants in 2019.
“Given the continued surge in omicron cases, we expect a more meaningful impact in January, especially on convention and group businesses,” said Jefferies analyst David Katz in a December note.
While a dip is expected in the short term, Bank of America Global Research forecasts that revenues will grow 24 percent this year, driven by strong consumer spending, more air traffic, international travelers, conventions and events.
Regional casinos, on the other hand, are “expected to grow only mid-single digits with modestly declining margins,” said BOA. Comps will be tougher at regional properties.
A big concern raised by the report is inflation, led by higher labor costs on the Las Vegas Strip, where it’s about 30 percent of revenue. At regional properties, labor is about 15% of revenue.
“Inflation (mostly wages) is a critical headwind that is new to many operators,” the Bank of America note said. “Las Vegas is the most exposed, but also has solid pricing power.”
