Las Vegas under the economic shock of the coronavirus: millions of tourists “practically zero”

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Coronavirus pandemic could spell economic disaster for Las Vegas

Like much of the country, Nevada has virtually closed, the bright lights of the Las Vegas Strip fading amid efforts to slow the spread of COVID-19. But unlike other parts of the country, no other state relies as much on tourism to boost its economy.

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LAS VEGAS – Like much of the country, Nevada has practically closed its doors, the bright lights of the Las Vegas Strip being replaced by the flashing lights of police cars parked in front of casinos in order to slow the spread of COVID- 19.

“It’s incredible. I mean, we’re on the Haunted Vegas tour, I didn’t think the next ghost town was going to be Las Vegas, “Adam Flowers, co-owner of Vegas Specialty Tours, told Fox News.

Police are stationed outside the casinos.

Police are stationed outside the casinos.
(Emily Lierle)

In a typical year, Las Vegas was teeming with people, welcoming about 42 million tourists to Sin City, the streets filled with shameless eyes plunging into the sea of ​​neon lights.

“So that’s an average of 3.5 million guests per month, and [now] this is obviously, for the current period, practically zero, “Steve Hill, CEO of the Las Vegas Convention and Visitors Authority (LVCVA), told Fox News. “It is shocking to see how different the outlook is from six weeks and three weeks ago. You know, we were all shocked, frankly, by the speed and depth of how it hit us. “

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The oasis in the middle of the desert suddenly dried up.

Last week, Caesars obtained 90 percent of its domestic labor. Penn National Gaming Inc. announced the sale of the iconic Tropicana casino for $ 307.5 million, which Bloomberg said was more than $ 50 million below what it paid for the property. five years ago.

“If it lasts nine months [to] a year, then we are dead. And the return is going to be long, difficult and painful, “said Bill Robinson, professor of economics at the University of Nevada in Las Vegas. “There will be no jobs here, and anyone with prospects elsewhere will want to go there. “

Las Vegas casinos are closed as health officials seek to curb the spread of COVID-19.

Las Vegas casinos are closed as health officials seek to curb the spread of COVID-19.

No other state in the country relies as much on tourism to boost its economy as Nevada.

Industry accounted for a fifth of the gross domestic product (GDP) of southern Nevada, or about 18.4%, in 2017. Tourism generates about $ 58 billion a year for southern Nevada and provides nearly 370,000 jobs , or about 40% of employment in Clark County, according to the LVCVA.

By comparison, tourism accounted for about 16% of Nevada’s total economic output in 2018, while Hawaii was second with 10% – no other state in the country had tourism GDP of more than 6%, according to PEW data.

In addition, the entertainment and hospitality sector made up about 40 percent of the state’s general fund, said Hill.

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“Nevada is more dependent on tourism and hospitality than Alaska is on oil or Montana on coal or Michigan on the auto industry. It’s a bigger part of our economy than any other state with a single economy, “said Hill. “So you’re right, this is a very difficult time for the Nevadans. But like I said, once we have that behind us, we’re still in Las Vegas. We are the place where people want to come back as soon as they can. “

MGM and other casinos on the Strip display messages of hope by lighting up empty hotel rooms.

MGM and other Strip casinos show hope when lighting up empty hotel rooms.
(Emily Lierle)

Last March, the Trump administration issued a Level 4 travel advisory, the severest warning on the State Department ladder, urging U.S. citizens to avoid all international travel due to the epidemic. of coronavirus. The President imposed a travel ban on most European countries and China and suspended non-essential travel between the southern border of Mexico and the northern border of Canada.

About 17% of tourism in Las Vegas is international, with the bulk coming from Canada, Mexico and the United Kingdom, said Hill.

States across the country have ordered non-essential businesses to shut down and people to stay at home, Trump extending federal guidelines on social distancing until April 30.

Wynn Casino Displays Message

Wynn Casino displays the message “Vegas Strong”.

Nevada Governor Steve Sisolak made the unprecedented decision to close the Las Vegas Strip in March, a difficult but necessary decision, said Hill.

“Our governor has taken the right steps. Closing the tape was painful, but it was clearly the right thing to do, “Hill told Fox News, adding that the early decision to close the doors, coupled with help from the federal government to help bridge the gap with programs like the Paycheck Protection Program, will help the industry come out “healthy on the other side”.

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Social distancing has proven effective in slowing the spread of COVID-19, smoothing the curve and undoubtedly saving countless lives – unfortunately, the economic fallout has been an inevitable side effect.

Nevada has set a new record with more than 92,000 jobless claims the week after the state closed, with the Economic Policy Institute predicting unemployment to reach nearly 20% by summer, according to New York Times.

For small business owners like Flowers, who runs Vegas Specialty Tours, exploring the scary side of Vegas and its old gangster roots, it’s about trying to survive the uncertainty.

The streets up and down the Strip are empty.

The streets up and down the Strip are empty.

“We are trying to reduce as much spending as possible. you know, if this thing goes in July, will we still be able to hold on? I do not know. I hope. I really do. But I don’t know, ”he said. “I mean, like I said, our tour guides do other tasks, other concerts … Maybe I should go there and start touring again. I have no idea what’s going to happen. “

Robinson said federal government assistance with additional Care Act funding will help keep money in the pockets of workers who have lost their jobs. However, the real concern is with the businesses and their lives. ability to recover financially.

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“All the big companies still have billions of dollars in debt and they have to somehow pay down their debt or refinance their debt, but there are huge financial problems and the casinos might actually have bigger financial problems by the end of this period than workers are, “said Robinson.

The turmoil and financial instability could lead companies to sell certain properties to recover money, as was the case in 2008 when MGM sold Treasure Island to billionaire Phil Ruffin.

“We could see better competition and lots of new players in town and maybe some good results,” said Robinson. “I don’t think they’re going to go bankrupt, but they could be in a situation where they would have to sell certain properties to cover their debt.”

Normally, hundreds of people line up to watch the Bellagio fountains.

Normally, hundreds of people line up to watch the Bellagio fountains.
(Ben Brown / Fox News)

The Strip casinos closed for the funeral of John F. Kennedy on November 25, 1963, for more than 50 years, but it is the first time that all Nevada statewide casinos have been sentenced to close, Michael Green, a history professor at the University of Nevada in Las Vegas, told the Associated Press.

The unprecedented situation has prompted the authorities to prepare for a number of scenarios by trying to take into account the severity of the economic impact when the order to stay at home and the travel restrictions are finally lifted.

“This is a wide range of potential outcomes, for sure. And at the moment, and we will tell our board of directors in a few weeks, we are modeling between 50 and 70% of what we expect next year in terms of room tax revenue, “said Hill , adding, “We are not just going to flip a switch and things will return to normal. “

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But, when things finally get back to normal, you can bet on one thing.

“We are going to have the biggest party the world has ever seen. When we can welcome our visitors again, everyone will need it. And there is no better place to have it than here in Las Vegas, “said Hill.

The Associated Press contributed to this report.

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