Las Vegas casinos brace for loss of Chinese tourism as coronavirus spreads




Las Vegas casinos brace for loss of Chinese tourism as coronavirus spreads
Las Vegas casinos brace for loss of Chinese tourism as coronavirus spreads  

LAS VEGAS - Five days a week, Lexi McKimmey strides the Las Vegas Strip as a showgirl, dressed in a sequined bikini and sparkly silver boots. She takes pictures with tourists and chats with them about where they're from.

Over the past few weeks, after the U.S. government restricted travel from China in response to the growing coronavirus outbreak, she's noticed fewer tourists from Asia.

"I feel like there's been a little bit of a decrease," McKimmey, 24, said as she worked near the Bellagio Fountains on Thursday. "I definitely have seen a lot more people in general walking around wearing face masks."

Several American casino companies already took a hit last month when Macao, the gambling capital of Asia, shuttered casinos for two weeks amid the spread of the new coronavirus. Now the question is how the outbreak could affect the U.S. gambling industry, centered in Las Vegas, which has historically hosted high rollers from China.

Business analysts and gambling experts say it's largely too soon to tell, though U.S.-based casino companies, including MGM Resorts International, Wynn Resorts Ltd. and Las Vegas Sands Corp., have warned investors in annual reports over the past month that travel restrictions could negatively affect their Las Vegas properties.

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"A significant portion of our U.S. business relies on the willingness and ability of premium international customers to travel to the U.S., including from mainland China," Wynn Resorts wrote in an annual report filed Friday. The company has already suffered from the temporary closures of its two Macao locations, the report said. "Our Las Vegas Operations and operations at Encore Boston Harbor may also be adversely impacted."

In 2018, Chinese visitors to Las Vegas made up about 4 percent of international travelers to the city, according to the Las Vegas Convention and Visitors Authority. The authority said that overall visitor volume and hotel occupancy were up in January 2020 compared to the previous years; visitor figures for February haven't yet been released. And January gambling revenues were up 9 percent from the same time last year, according to a report by investment firm SunTrust Robinson Humphrey.

But at least two major Last Vegas events set for March have been canceled: The Trump administration nixed a summit of Asian leaders, and Google called off an internal event. A survey of hotel room rates by SunTrust Robinson Humphrey found some pricing decreases for March, potentially suggesting cancellations related to the coronavirus, though rates for April and beyond remain stable for now.

"Strip operators haven't noted any impact from the coronavirus outbreak on their Las Vegas properties yet, but we know the situation is fairly fluid," said Barry Jonas, a gambling analyst with SunTrust Robinson Humphrey. He added that the outlook could change within days or weeks as the coronavirus - and its financial impact - spreads.

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Wynn Resorts said in a statement that the company is monitoring the virus with local health agencies and has installed hand sanitizer dispensers for employees and guests. MGM declined to comment. Las Vegas Sands Corp. did not return requests for comment.

Las Vegas casinos have long courted Chinese gamblers, offering baccarat - one of the most lucrative games in the city - as well as separate rooms for big spenders and extravagant Lunar New Year celebrations.

The city has faced growing competition in recent years, though, from casinos in Macao, which have persuaded some Chinese gamblers to stay closer to home, analysts said. And while high rollers from the Far East are still a significant part of Las Vegas' gambling economy, they are becoming less central as the city explores other ways to draw tourists. MGM, which operates 13 Las Vegas Strip casinos, said in a January report that Asian tourists playing baccarat contributed just 2 percent to the company's profitability on the Strip, compared to 5 percent to 7 percent historically.

"They are still important, but it's not as material as it once was, because Vegas has diversified into mass-market-oriented revenue streams, including world-class nightlife and restaurants," Jonas said.

Hunter Robinette, 35, who works as a bartender on the Strip, said that he's noticed a small decrease in tourists in the last couple of weeks but that it hasn't affected his tips. He said he's more concerned about the coronavirus' potential spread in California than in China.

"We get a ton of tourists here every weekend from California," said Robinette, who works at a bar outside Planet Hollywood. "I have to interact with a lot of people and pick up dirty cups and stuff, so it makes me a little nervous."

About 21 percent of domestic travelers to Las Vegas in 2018 were from California, according to the Las Vegas Convention and Visitors Authority. If travel from California slowed, it could hurt the city's economy, said David Schwartz, a gambling historian and professor at the University of Nevada, Las Vegas.

"Las Vegas has been very successful for many years catering to people from California," Schwartz said. "And if that visitation were to decline, that would be pretty significant."

So far, though, some workers on the Strip said that while they were monitoring news of the virus, they weren't overly worried.

"I'm pretty sure it could slow down if this thing gets worse," Daniel Estrada, 24, said as he handed out flyers to promote the nightclub Hakkasan on Thursday. "But there's still a lot of people out here right now."

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