Why Your Las Vegas Strip Trip Is Going to Cost More
Good news for Caesars, MGM, Wynn, and the rest of the Strip's players may be bad news for the average visitor.
The Las Vegas Strip has entered a golden era. The jam-packed 4.2-mile stretch of road has become a destination for the business world and the sports world along with people looking for world-class entertainment.
That's something that has actually become established in only the last few years. Las Vegas has been a business destination for decades as many of the largest conventions in the world call the city home. In addition, the Strip's entertainment bona fides have been well established as Las Vegas has slowly shed its reputation as a place for nostalgia and magic shows to being the ultimate residency destination for major artists.
DON'T MISS: Iconic Las Vegas Strip Resort Casino Adds a Major Attraction
The Las Vegas Strip's place as a top sports destination only began taking shape in 2018 when the Supreme Court allowed states to legalize sports betting. As that started to happen, Las Vegas lost its stigma as a place that professional sports leagues had to avoid.
That change made Las Vegas just another place that offered sports betting. Once that happened, all the major sports leagues saw the city as a destination to place a team. The National Hockey League got there first with the Las Vegas Golden Knights expansion team, but that was followed quickly by the NFL's Oakland Raiders moving to an off-Strip stadium, and now, the Oakland A's appear headed to the Strip as well.
The NBA has not moved a team to Las Vegas just yet, although it seems imminent, but the league has held its summer league on the Strip. That event joined the NFL Draft, the upcoming Super Bowl, and an annual Formula 1 race in making the Las Vegas Strip a major, perhaps the biggest, sports destination.
Image source: USA TODAY Sports
Bigger Events Will Drive Las Vegas Strip Prices Higher
Caesars Entertainment CEO Tom Reeg talked about how the Las Vegas Strip continues to attract bigger events and that brings better customers to not just his properties, but also his rivals during his company's first-quarter earnings call.
"I think you've seen Vegas as a market do a fantastic job of continuing to add events. And in the case of sports franchises or Formula 1 that bring a significantly more valuable customer to the market. So if I look at Vegas now, all of us are pretty full, I listened to Bill and team yesterday, congratulations to them, they had a fantastic quarter as well. But we're all doing well here. Occupancy rates are quite high," he said.
The "Bill" he's referring to, of course, is MGM Resorts International (MGM) - Get Free Report CEO Bill Hornbuckle.
Reeg believes that Las Vegas' events schedule has helped his company and rivals including MGM and Wynn Resorts (WYNN) - Get Free Report attract better customers.
"You get better by up-tiering the average customer that is coming to the market. And that's what you can see in our own microcosm of the market in Caesars, where what's happened in our business over the last three years is both the expense discipline, but also a better average customer," he added.
Las Vegas Strip Wants a Better Customer
Reeg made it clear that Caesars' growth will come from a higher quality of customers visiting the Strip. That's being driven by sports and business groups.
"You see the Raiders come to town. You see Formula 1. You see us gaining share as a market in the group business. The people that come to see those, to see Formula 1, the A's just announced a couple of weeks ago, tend to be a better average customer. So you're bringing in higher-value customers, and we're already full, so you're kicking out the lowest end. I see no reason that that needs to stop or would stop," he added.
That's good news for Las Vegas but maybe bad news for a certain class of tourists that used to be courted by the city.
"We all know that back in our parents' day, it was a very different market, low value, you get steak and lobster for a couple of bucks. Now you're talking about one of the best food and beverage scenes in the world, among the best sports and entertainment experiences in the world and continually adding to that," he said. "We are working to continue to add to that, MGM, Wynn, Sands, they're all working to up-tier what we're offering to customers."
Source: TheStreet
