A monthly report produced for Commerce Real Estate Solutions by Stephen P. A. Brown, PhD, Center for Business & Economic Research University of Nevada, Las VegasIssue 16 April 2012 To receive this newsletter by e-mail, please subscribe at www.comre.com/subscribeThe Changing Nature ofLas Vegas TourismThe Southern Nevada economy is largely defined by tourism. A region’s economic base is madeup of the industries that produce the goods and services the region provides to the rest of theworld. According to data from the U.S. Bureau of Labor Statistics, the Clark County economicbase comprises leisure and hospitality and air and ground transportation services, the latterundoubtedly the result of tourism.With strong population growth, the construction and and hospitality employment with overall Californiareal estate industry also stood out as an important aspect employment.of the Southern Nevada economy until about 2007. The relative stability of the leisure and hospitalityDespite its strong contributions, however, construction industry is not surprising. Whatever sectors areand real estate cannot be considered part of a region’s doing well in the U.S. economy generate the incomeeconomic base. Its output is not exported to the rest necessary to support tourism, gaming and hospitality.of the world. What drives construction and real estate As one of the premiere tourist destinations in the world,is the region’s growth—which is mostly dependent on Las Vegas can always share in others’ fortunes.the strength of the industries in its economic base. Las Vegas Visitor Volume RisingTourism and Gaming As of March, Clark County saw 23 consecutiveFrom 1990 through 2007, the growth of Clark County months of increased tourism. In 2011, Clark Countygross gaming revenue outpaced U.S. economic activity. visitor volume was 3.6 percent higher than in 2010. ForClark County gaming revenue dropped more sharply the first three months of 2012, Clark County visitorduring the U.S. recession than overall U.S. economic volume averaged 3.2 percent higher than the sameactivity, as was the case in previous recessions. Given time period in 2011. For Clark County visitor volumethe depth of the U.S. recession, it’s not surprising that to reach the high water mark of 43,915,649 set in 2007,gaming revenue has been a little slow to rise. we need to see a 4.2 percent increase over 2011. ThatEmployment in Las Vegas leisure and hospitality probably will not happen in 2012.outpaced overall U.S. employment from 1990 through2007. Since then, employment in Las Vegas leisure This report is commissioned byand hospitality has basically held its own with overall Commerce Real Estate Solutions firstname.lastname@example.org • 801-322-2000national employment. So employment in the industryhas been more stable than gaming revenue. We seea similar picture when comparing Las Vegas leisure
nevada’s Economy April 2012The visitor picture is stronger for Las Vegas. Las Vegas Staying Longer; Paying Higher Room Ratesvisitor volume is approaching the levels seen in 2007 During 2011, the average visitor to Las Vegas stayedbefore the U.S. recession. In 2011, Las Vegas visitor longer than in 2010. Room nights occupied rose by 5.3volume was 4.3 percent higher than in 2010. For the percent. That figure exceeds the gain in visitor volumefirst three months of 2012, Las Vegas visitor volume by 1.0 percentage points. During the first three monthsaveraged 3.6 percent higher than for the same period of 2012, however, visitor volume was 3.6 percent higherin 2011. For Las Vegas visitor volume to reach the high than during the same period in 2011, but room nightswater mark of 39,196,761 set in 2007, we need to see were only 3.0 percent higher. Room nights occupiedonly a 0.7 percent increase over 2011. That is quite were 5.4 percent higher during the first three monthslikely to happen in 2012. of 2012 than during the same period in 2007 beforeLas Vegas tourism is changing as it recovers. Visitors the recession.are coming from farther away, staying longer and Visitors are also paying higher room rates than they didpaying higher hotel rates than in recent years. Visitors in 2010. During 2011, room rates were 10.7 percentalso seem to be gambling less and purchasing less from higher than during the same period in 2010. Duringthe retail shops in the casinos. the first three months of 2012, room rates were 3.6Visitor Composition Has Changed percent higher than during the same period in 2011.Visitors came from farther away in 2011 than in Despite the gains, room rates during the first threeprevious years. A higher percentage of Las Vegas months of 2012 were 16.8 percent below the rates seenvisitors are arriving by air. Passenger volume at Las in the first three months of 2007.Vegas’ McCarran airport, including those passing Gambling Lessthrough, was 4.4 percent higher in 2011 than in 2010. During the recovery, gaming revenue has risen by lessDuring the first three months of 2012, passenger than visitor volume, but that is changing. During 2011,volume was 3.0 percent higher than in the first three Clark County gross gaming revenue was 3.5 percentmonths of 2011. higher in 2010—0.1 percentage points less than theThe slow economic recovery in the West has been gain in Clark County visitor volume. During the firstevident in the changing composition of visitors. The three months of 2012, Clark County gross gamingnumber of visitors arriving by automobile declined by revenue was 4.4 percent higher than in the first three0.5 percent in 2011. The number of people arriving months of 2012, while visitor volume was only 2.1at the California-Nevada border was up by only 0.3 percent higher. Despite the recent gains, Clark Countypercent.In early 2012, however, we saw resurgence inautomobile traffic, despite higher gasoline prices. Thenumber of visitors arriving by automobile during thefirst three months of the year was 0.5 percent higherthan for the same period in 2011. The number arrivingat the California-Nevada border was up by 7.5 percent.One consequence of more visitors arriving by air isincreased taxicab ridership. During 2011, Las Vegastaxi ridership was 7.3 percent higher than in 2010 and1.6 percent higher than in 2007. During the first threemonths of 2012, taxicab ridership was 3.9 percenthigher than in the same period in 2011.Commerce Real Estate Solutions | comre.com
This information is provided compliments of Michael M. Lawson President and CEO of Commerce Real Estate Solutions Commerce Real Estate Solutions Mike Hillis, SIOR, CCIM 3980 Howard Hughes Parkway, Suite 100 Las Vegas, NV 89169 Managing Partner of Commerce Real Estate Solutions, Las Vegas Tel (702) 796-7900 • Fax (702) 796-7920 www.comre.com To receive this newsletter by e-mail, please subscribe at www.comre.com/subscribe This report has been prepared solely for information purposes. It does not purportCommerce is a regional real estate firm with international ties, to be a complete description of thededicated first and foremost to our clients. With the industry’s markets or developments contained inpremier professionals, and industry leading technology, our mission this material.is to exceed our clients’ expectations through service excellence. The information contained in this report,For further information on the Nevada commercial real estate while not guaranteed, has been securedmarket, visit www.comre.com or call 702-796-7900. from sources we believe to be reliable.