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How diversification in the hospitality sector has impacted share prices

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The hospitality sector has undergone big changes in the last few years. Asides from the demographics of visitors and customers changing significantly, there has been an increased demand for new ways of accessing services. One sector that has undergone a big change is the casino resort and gambling sector. The way that hospitality and casino companies have responded to clients’ needs has had a big impact on their share value and success.

Challenges over the last few years

Many of the US’s largest casino resorts noted significant declines in revenue in 2020. Some of the big names had to suffer their losses throughout 2020 and Q1 of 2021, others have been able to recoup revenue through other means.

Despite this, there were still returns to be made. The VanEck Vectors Gaming ETF, which is comprised of land-based and online casino shares, may have underperformed during 2020, but investors still got a 14.2% return over the year as per data processed by https://www.investopedia.com/top-casino-stocks. Big names like MGM Resorts International, Penn National Gaming Inc, Ballys Corp, and Red Rock Resorts still did well and are considered some of the strongest of such stocks at the moment.

 

The situation in NJ

The State of New Jersey has some 23 land-based casinos spread across 12 cities. Atlantic City is home to the majority of these, with 10 located within the city limits.

In recent years, online gambling and sports betting has continued on a meteoric rise in NJ, which has added another layer of competition for resorts and hotels that offered in-person gambling. As the overall online gambling sector has continued to grow at an exceptional pace in recent years, so too has the strain on brick-and-mortar establishments. Part of this growth has come from the proliferation of smartphone usage combined with an increase in access to fast and affordable internet. As such, the market is growing at a compound annual growth rate of 11.5% and is expected to surpass $127 billion by 2027, according to https://www.grandviewresearch.com/press-release/.

One of the ways land-based casinos have sought to manage this trend is by offering their services online as well. For example, Caesars is a casino that is present in New Jersey but also has a solid online presence. You can find them listed at https://www.bonusfinder.com/online-casinos/by-state/new-jersey/ along with various other NJ and US casinos that have decided to diversify by offering digital options to their clientele. Of course, the experience is not comparable, and technology is yet to find a way to replicate the full experience of staying in a resort, via mobile!

The past eight years have seen an exponential rise in online casino usage in the state. Since then, this spike in activity paving the way for many names to expand their operations into the online sector through the offering of sports betting, casino games, eSports betting, and more for mobile and computer users.

 

Looking ahead

It is this diversification into digitalization that has saved the skin of many casino operators. This trend has been coming for some time as more and more people seek convenience over actual, physical experiences. The problem is those in the hospitality sector may not be able to harness digitalization to retain customers.

Those with businesses that focus on the culinary experience, hotel and spa stays, and large events will continue to find it hard to diversify their portfolio of services to meet the changing demands of the 21st century.

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