Moody’s analysts: ‘The Las Vegas recovery is under way’

Tourists cross the Strip near Caesars Palace on April 28, 2011.

Analysts at Moody's Investors Service in New York have become more optimistic about business conditions for hotel-casino operators on the Las Vegas Strip.

Hotel numbers in particular are looking better, Moody's said in a report Monday titled "Las Vegas Strip Gaming Recovery Brightens."

The report notes several improving trends in 2011, including a 4.3 percent rise in Las Vegas visitor volume from 2010 thanks largely to the improving U.S. economy. Nearly 40 million people visited Las Vegas in 2011, close to the city's 2007 peak.

Moody's noted that in 2011 there was a 3.5 percent increase in slot machine revenue and a citywide 3.4 percentage point increase in hotel occupancy, to 83.8 percent, the first increase since 2007.

With no megaresorts in the development pipeline following the December 2010 opening of the Cosmopolitan, owners of existing hotels now face less competition from new capacity.

''The improvements are supported by low growth in hotel room supply, which gives (existing hotel) operators more pricing power,'' Moody's said in its report.

"After suffering through a deep trough during the recession when visitor volume declined as new capacity came online, the Las Vegas recovery is under way," Peggy Holloway, a Moody's vice president - senior credit officer, said in a statement. "Hotels are benefiting from increased visitor numbers that permit higher room rates, while gaming revenues are recovering, albeit more slowly."

Monday’s report confirms year-to-year trends for January reported earlier by the Las Vegas Convention and Visitors Authority.

The LVCVA said that citywide, visitor volume for January was up 0.9 percent and the average daily hotel room rate improved 6.2 percent to $113.82 — the 23rd consecutive month of increases for these categories.

Also, Nevada regulators said gaming revenue on the Las Vegas Strip in January advanced 29.16 percent on a year-to-year basis to $623.5 million.

While that increase was driven largely by volatile baccarat play, less-volatile slot machine play is showing slow but steady growth on Strip.

Through January, it was up 2.69 percent comparing the previous 12 months to the same 12-month period ending in January 2011.

Moody's noted there were concerns about how gasoline prices prices could affect business in Las Vegas, "as money that consumers would spend at the casino could be deployed to fuel spending.

"With crude oil currently trading at its highest level since 2008 and high gasoline prices, consumers could pull back on discretionary spending and travel to Las Vegas,'' the report said.

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  1. It's wonderful that they think the big casino owners are getting richer, however.

    1) Schools are still terrible and we continue to hear about educational budget shortfalls.

    2) Empty retail centers everywhere. That hasn't changed.

    3) Where are all the new jobs besides the menial customer service positions?

    4) What new big business is Southern Nevada attracting? Anything?

  2. If fuel prices continue to climb, the Las Vegas recovery could be short lived indeed. I know flights in general have gone up significantly and what was once a bargain vacation is now becoming more of an investment. I am finding fewer and fewer deals that encourage me to make the journey to Las Vegas. Hopefully things will change for the better and soon.

  3. bagdad; makes sense to me. too many invariables to consider when making vacation plans. i'll stay close to home this year.

  4. Yeah, they got some Chinese throwing away money at bah-ka-rah, host some big conventions and events, open some $1,000-a-night nightclubs, and suddenly they're "recovering." It's all false; there's no recovery. What made Vegas Vegas is gone. When John and Jane Tourist ask each other where to go on vacation this summer, Vegas isn't on the list any more.

  5. @Team...this is a service-industry based town, always has been, always will be and as such, the majority of positions will be in customer service. The schools are terrible, but who is to blame there if not the school board only, that and the people that moved here in droves and wanted the best education with no taxes, we reap what we sow. Over the last few years, and with the exception of small geographic areas, most locations saw a decline in commercial occupancy during the economic downturn, and as a service related town, we will always be the last to recover. The two best things we can do as residents is, if at ALL POSSIBLE, buy a house (prices are down to 1998-2000 levels and 60-75K buys a LOT of house now), and when you go out to dinner, tip the waitress an extra buck. That extra dollar here and there will mean an additional dollar back into the local economy. It is getting better around here, from an increased wait at local off-strip restaurants to non-ARRA funded private construction projects kicking off around the valley, the sun is once again beginning to rise on our little desert oasis.