The National Football League draft felt as if Las Vegas -- specifically Caesars Entertainment (CZR) and MGM Resorts International (MGM) Las Vegas Strip properties -- officially put the covid pandemic in the rear-view mirror.
Casinos were packed, the Strip was actually closed to cars in order to accommodate the huge crowds, and mask requirements were a thing of the past.
It was one of the largest crowds in Las Vegas since covid hit and it felt like a sort of unofficial end to the nightmare that was covid.
The pandemic had literally shut down the city, and even when it reopened, things were not normal. Major conventions like the Consumer Electronics Show were held in a weird mix of in-person attendees and virtual ones.
Only about 30,000 people attended CES, instead of the nearly 200,000 who normally pack the city's hotels and casinos. It was a sign that even in January 2022, Las Vegas faced a long road, but it was a road the city seemed to have traveled during the draft in late April.
Now, however, when the pandemic seems to have moved from something that controlled how we live to more of a background nuisance, covid has flared up again. Case numbers in Las Vegas have risen, and some venues in the city have decided to bring back indoor mask mandates.
That's not something casino operators would like to see return as mask mandates deter travelers looking for a "normal" vacation. But with cases rising, is it something Caesars, MGM, Wynn Resorts (WYNN), and other operators need to worry about?
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Las Vegas Brings Back Masks
Las Vegas Nellis Air Force Base and some other locations in the city have brought back indoor mask requirements as covid cases have risen.
In addition, the Red Rock Canyon visitors center has mandated masks while the University of Nevada, Las Vegas, has highly suggested that students and staff wear them on campus but has stopped short of making mask-wearing a requirement.
That has raised the specter that Las Vegas's casinos could be forced to bring bask mask mandates. Fortunately, at least for the casino operators that want mask-wearing to remain optional, such a move does not appear imminent, the Las Vegas Review-Journal reported.
"A spokesman for the Nevada Gaming Control Board on [June 13] said administrators would only issue directives for facial coverings at casinos if directed to under an order from Gov. Steve Sisolak — and that hasn’t happened," the paper reported.
Clark County, which includes Las Vegas, on June 9 had its covid-19 designation raised to high from moderate. That designation, which is based on case rates and hospitalizations, comes with a general Centers for Disease Control and Prevention recommendation that people wear masks.
Las Vegas Has Completed Its Comeback
Las Vegas appears to have returned to prepandemic visitor levels (more or less) even before international travelers begin to come back in their normal numbers.
Caesars Chief Operating Officer Anthony Carano commented on the city's improving visitor counts during his company's first-quarter earnings call.
Turning to Las Vegas, demand trends strengthened throughout the quarter, leading to an all-time first-quarter record of $411 million and adjusted Ebitda excluding real rent payments. Ebitda improved 140% versus the first quarter of 2021 and margins improved 1000 basis points to 45%. Total occupancy for Q1 was 83% with weekend occupancy at 95% and midweek at 77%. As of April 1, 2022, we lifted all occupancy caps in Las Vegas, and would expect to see a material improvement occupancy for the second quarter of 2022.
MGM Resorts Chief Executive Bill Hornbuckle mirrored those remarks with his comments during his company's first-quarter earnings call.
In Las Vegas, we maintained strong margins in the first quarter, a reflection of the sustainable operating learnings implemented from the pandemic, Strong weekend occupancies and [average daily rates] were driven by a robust event calendar, and we see that trend continuing into the second quarter. For the mid-week, our occupancy is still behind 2019, but an improving mix of business and a growing group base will allow us to ramp in the remainder of the year. We continue to expect our convention room nights to reach 90% of 2019 levels in the back half of 2022. Importantly, we are seeing increased spend levels for our groups year to date, including catering and banquets, and to spotlight, our international leisure trends were beginning to see positive indicators of the return of international flight capacity.
A mask mandate may not halt that momentum fully, but it likely would cause some cancellations and could cause the convention business to push pause again.
That does not appear to currently be in the cards, but for both investors and potential Sin City visitors, it's a situation worth watching.
