By Katherine Sayre and Kim Mackrael | Photographs by Bridget Bennett for The Wall Street Journal
LAS VEGAS -- Inside a strip mall here, blackjack students
practiced flipping cards onto tables empty of gamblers. Nearby, a
few people leaned over a craps table, the thrill of the game
replaced by quiet study as the dice rolled.
At CEG Dealer School, an academy for would-be casino dealers,
the pipeline of workers aiming to join Las Vegas's battered tourism
economy is robust, even though the city has the highest
unemployment rate of any major metro area in the U.S.
Las Vegas is slowly climbing out of a steep hole, lifted by
tentative reopenings and the vaccine rollout. The Las Vegas area's
unemployment rate was 10.5% on a seasonally adjusted basis in
December, the latest month available -- the worst of any
metropolitan area in the country with more than a million
residents. That's a major improvement since the rate hit 34.2% at
its worst point last year. January figures are scheduled to be
released on Friday.
The leisure and hospitality sector, which used to employ more
than a quarter of the region's nonfarm workers, ground to a halt
last spring. By January, there were roughly 30% fewer leisure and
hospitality jobs here.
Yet laid-off workers are signing up for training at the dealer
school, new casinos are opening and big entertainment events and
conventions are slated for this summer. One of the Strip's most
valuable properties, the Venetian Las Vegas and related assets, was
just sold for $6.25 billion to private-equity investors and a
real-estate investment trust.
They are all betting that the gambling-and-convention boomtown
will be back in full force.
"Clearly this town is attached at the hip of hospitality," said
David Noll, managing director of the dealer school and a
casino-industry veteran. "You kind of take it as you go. That's a
trade off. You come here and it's an exciting town -- right up
until it isn't. You have to invest in the idea that Vegas always
comes back bigger and better."
The latest bust is the third and worst for the city in the past
two decades -- after downturns from 9/11 and the 2007-09 recession,
which, like the pandemic-driven downturn, dealt heavy blows to its
tourism-reliant economy.
Efforts over the years to diversify the city's economy haven't
been enough to blunt tourism's dominance. These days, Las Vegas is
as committed as ever to the entertainment and gambling industry
that makes it -- and periodically breaks it.
With slowing Covid-19 trends, companies are lining up large
conventions and entertainment acts for later this year. Casino
resorts are setting up their massive pool areas for the annual kick
off amid longer sunny days in March, and the performer Usher is
scheduled to start a residency at Caesars Palace. The World of
Concrete will be the first major convention to return to Las Vegas,
with a date set in early June. The event has attracted 60,000
attendees in previous years, but it is unclear how many will attend
in June.
Casinos moved from 35% capacity to 50% capacity on March 15, and
casino operators have reported busy weekend crowds. Restaurants and
bars are also at 50%. Large gatherings including conventions and
live entertainment can have up to 250 people or 50% capacity,
whichever is less, although organizers who want to host more people
can apply to the state for approval. Local health officials said
last week that food and hospitality workers are now eligible to get
a vaccine, including workers who have been laid off or furloughed
and are seeking employment.
Hotels are advertising their plans for social-distancing,
hand-washing and cleaning of everything from rooms to slot
machines. MGM Resorts International, operator of the Bellagio and
Mirage among other Strip properties, said it named Clorox its
"official guest disinfectant and hand sanitizer brand."
Despite speculation that pent-up demand will bring a "roaring
20s" to the Strip, economists and many executives say it could take
a year or more to return to the kinds of crowds that were common
before the pandemic. An all-time high of 42.9 million people
visited Las Vegas in 2016, and convention attendance reached a
record-setting 6.6 million meeting attendees in 2019.
In 2020, the number of visitors to the area dipped by 55%
compared with the previous year, to a level last seen about three
decades ago, when the metro area was much smaller. Gambling revenue
was down by 43% on the Strip and 37% across the metro area.
Prices for hotel rooms were down to some of the lowest in three
decades at the beginning of 2021, for an average of about $91 per
night, according to the Las Vegas Convention and Visitors
Authority. In January 2020, the average room rate was $153.
Hotel occupancy on the Strip hovered at around half the
pre-pandemic rate in the months following the June casino
reopenings. In January, average occupancy on the Strip was 31%,
down from about 89% occupancy the prior year.
After the 2007-09 recession, Nevada had one of the slowest
recoveries of any state. An analysis by the Pew Charitable Trusts
found that inflation-adjusted personal income didn't rebound to
prerecession levels until late 2014. The unemployment rate stayed
above its prerecession level until 2017, according to Labor
Department data.
In December, Nevada published a forecast that anticipates state
revenues from gaming and live entertainment will remain below their
pre-pandemic levels for at least two more years.
S&P Global Ratings this month downgraded MGM Resorts
International, saying that group cancellations for Las Vegas will
likely extend into the third quarter of this year. "A combination
of factors, including potential lingering restrictions on the size
of gatherings and safety concerns, lower corporate travel budgets,
and corporate travel restrictions could impair this segment for an
extended period," the ratings agency said.
Analysts and industry leaders say the hospitality industry is
ultimately what makes Las Vegas stand out and thrive. "We would be
just as wrong to give up on our core competency today as we would
have been" during past downturns, said Jeremy Aguero, principal
analyst at Las Vegas-based economic research firm Applied Analysis.
Although a full recovery will take time, he said, hotels should
start filling up again as more people feel comfortable traveling
and large events and shows resume. "The underlying economics, in
terms of what brings people here, haven't changed," he said.
State and local officials have attempted to diversify the
economy over the years, including after the 2007-09 recession
hammered Las Vegas. The state established the Governor's Office of
Economic Development in 2011, which offers tax incentives and
administers a workforce development program, and several
high-profile companies have established or expanded operations in
the Las Vegas area in recent years, including Google, the main
business of Alphabet Inc.
Some sectors have shown strong growth. In the decade leading up
to the pandemic, the number of jobs in education and health
services rose by 56% in the Las Vegas metro area, and employment in
professional and business services grew 53%. The leisure and
hospitality sector grew by about 17% during the same period, but
continued to dwarf other sectors in terms of actual numbers.
A recent report on Nevada's Covid-19 recovery published by the
economic development office promotes further diversification and a
push for more technology- and skill-intensive jobs. It said that
Southern Nevada, which includes Las Vegas, started its
diversification efforts from a small base, "and the present crisis
came too soon" for the benefits to be properly felt.
High-profile projects show the focus remains on the leisure and
hospitality sector. Las Vegas Sands Corp. said this month it has
agreed to sell its Las Vegas properties, which include the Venetian
and Palazzo casinos and the Sands Expo and Convention Center, for
$6.25 billion to Apollo Global Management Inc. and a real-estate
investment trust, Vici Properties Inc. Sands, founded by casino
magnate Sheldon Adelson who died in January, plans to focus on its
properties in Macau and Singapore.
"Our view is, both for the consumers and for corporate
customers, the city's relevance has really never been higher," said
Alex van Hoek, partner at Apollo Global Management, in an
interview.
Casino owner Derek Stevens opened the billion-dollar Circa
resort in downtown Las Vegas in October, including an
amphitheater-style heated pool with a big-screen for watching
sports. The outdoor space, always a feature in plans for the
development, has become an even bigger asset during the pandemic as
people opt to be outside.
Mr. Stevens said he has encountered customers who have been
cooped up for a year and waited to get their vaccines before
traveling, including a man about 50 years old who was still too
concerned to fly and drove to Las Vegas from Buffalo, N.Y.
"For every one person like that, I've got another person coming
out that doesn't believe Covid exists, [who] has come out every two
weekends because he loves the fact that the flights are so cheap,"
Mr. Stevens said.
Malaysian company Genting Group is nearly finished building
Resorts World, a $4.3 billion megacasino that is the first new
resort to be built on the Strip in more than a decade. The resort
includes a 3,500-room hotel, a 117,000-square-foot casino and
massive LED screens on each hotel tower. It is expected to open
this summer.
About 90,000 people have applied for the 6,000 to 7,000 job
openings at Resorts World. Job seekers range from locals working at
competing casinos, locals who are still out of work and people from
across the country looking to move to Las Vegas.
"We know we won't fix the problem in Las Vegas with
unemployment, but if things continue to get better like we think
they are...it would really help boost the economy here," said Scott
Sibella, Resorts World president and a longtime Vegas casino
executive.
Some local economists and industry experts say pent-up demand
for travel and a sharp rise in household savings are expected to
lead to a quicker recovery compared with the ramp up after the
2007-09 recession.
"The return for Las Vegas is actually going to be stronger and
over a shorter period of time," said Alan Feldman, a University of
Nevada, Las Vegas International Gaming Institute fellow and former
MGM Resorts executive.
Steve Hill, chief executive officer of the Las Vegas Convention
and Visitors Authority, said the World of Concrete convention
should help boost confidence in the city's recovery and the idea
that other large conventions can be held safely.
Keeping people separated at conventions and on the Strip remains
the right decision for now because of Covid-19 risks, Mr. Hill
said. "But that is not a business model that works for Las Vegas or
any other tourism destination" over the long term, he said. "Vegas
is really about excitement, and excitement almost always comes in a
crowd."
The organization just finished a $989 million dollar expansion
on its landmark convention center. Mr. Hill said the LVCVA has more
space booked for the fiscal year ending June 30, 2022, than ever
before, partly because some conventions that were delayed in recent
months are being pushed to midyear and will take place again at
their usual time in early 2022.
Meanwhile, thousands of workers who keep the casino resorts
operating, from cooks to convention servers to housekeepers and
room service delivery people, are waiting for their jobs to return,
and some are wondering whether casino operators will move on to the
next tourism boom without them, as companies practice operating
with fewer workers to cut costs.
Culinary Union Local 226, which represents about 60,000
hospitality workers in Nevada, says half of their members are still
out of work.
On a recent morning in North Las Vegas, a line of cars formed
outside the Culinary Academy, a nonprofit school that trains
hospitality workers for the casino industry. The campus turned
itself into a food pantry last spring for laid-off and furloughed
workers. The academy has given away 12.6 million pounds of
food.
Concession workers who staffed the local Smith Center for
Performing Arts before the pandemic are now running the warehouse.
Some learned to drive forklifts to move boxes of food. The academy
expects to continue the operation for the foreseeable future.
"Although people are going to start to go back to work, they're
not yet going to return to that level of employment -- those full
time work hours, the overtime," said Mark Scott, chief executive
officer of the Culinary Academy. "The tips may not quite be there
for people."
Joaquin Ortiz, 65, became a buffet server in 2013 after he was
forced to close his upholstery business during the 2007-09
recession.
Last March, he was told to turn in his uniform at the casino
where he was working, and he has been living off dwindling savings
and unemployment assistance. He is worried when the job comes back,
he will be replaced by a new worker rather than being called back.
Even at 65, he said, he doesn't want to retire. "I want to work,"
Mr. Ortiz said. "I'm ready to work."
Some of the students at the CEG Dealer School are laid-off
workers from other parts of a casino's operations, such as
housekeeping and food service. Others are jumping into the industry
for the first time, even relocating from across the country.
Mr. Noll, 51, managing director of the school, made his way to
Las Vegas in 1991. He initially flunked his craps dealer audition,
but soon worked his way into the job at Golden Gate casino. He went
on to positions at about a dozen other casinos.
"A dealer school, for many people, is just a way forward," he
said.
As industry opportunities became slim in the 2007-09 recession,
he stepped away from casinos to canvas for the Democratic Party and
work as a business consultant. Mr. Noll wanted to be back on the
casino floor by 2017, so he signed up at CEG Dealer School to brush
up his skills. He met the school's founder, Alex Kim, and became a
business partner in the school.
Mr. Kim, 34, a Las Vegas native, studied accounting at
University of Nevada Las Vegas. He found the casino business more
alluring and became a dealer instead. But when he was laid off from
the Cosmopolitan in 2013, he launched the dealer school with help
from his family. His first location in the suburb of Henderson
failed to attract enough students.
He put his gaming tables in his garage and turned to his parents
again -- "I told them, just one more try," he said -- and reopened
closer to the casino action. This time, the investment paid
off.
Write to Katherine Sayre at katherine.sayre@wsj.com and Kim
Mackrael at kim.mackrael@wsj.com
(END) Dow Jones Newswires
March 18, 2021 12:37 ET (16:37 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.