Research & Forecast Report LAS VEGAS | HOTEL Q2 2020
The Great Pause Economic Indicators R Re R Passengers Attendance > Las Vegas resorts, hotels and motels suspended
operations for most of the second quarter +1.6 +1.4%
> Re-openings began in June, with more properties Feb opening than was initially predicted +6.5% 2020
> No sales occurred in the second quarter of 2020
With data from May 2020 available from the Las Vegas Market Indicators Convention & Visitors Authority, we can see clearly the impact Relative to prior period Q2 2019 Q3 2020* an industry shut down has on those industry’s statistics. Room Room Inventory occupancy, average daily rate (ADR) and revenue per available Room Occupancy room (RevPAR) collapsed in April and May 2020, reaching levels possibly not seen in Southern Nevada’s history. After significant Average Daily Rate investment sales over the past two quarters, no hospitality Revenue Per Available Room properties sold in the second quarter of 2020. *Data Not Available
Year-to-date visitor volume in May 2020 was 8.7 million visitors, representing negative 38.5 percent year-over-year growth. Room occupancy growth in May 2020 was negative 45.8 percent Summary Statistics citywide, negative 46.8 percent on the Las Vegas “Strip” and Las Vegas Market Q2, 2019 Q1, 2020 Q2, 2020
Room Inventory 143,251 141,934 142,225 Revenue Per Available Room (RevPAR) Room Occupancy 91.2% 70.8% 1.7%
$140.00 Average Daily Rate $130.45 $142.97 $60.50 $120.00
$100.00 Revenue Per Available Room $118.89 $101.19 $1.03 $80.00
$60.00
$40.00
$20.00
$0.00 3 Q 2018 4 Q 2018 1 Q 2019 2 Q 2019 3 Q 2019 4 Q 2019 1 Q 2020 2 Q 2020 negative 43.2 percent in Downtown. ADR in May 2020 was Sales Volume $60.70, compared to $140.52 one year ago, and RevPAR was $6,000,000,000 $1.70 in May 2020, compared to $127.59 one year ago. Gaming $5,000,000,000 revenue growth was negative 44.9 percent in Clark County, $4,000,000,000 negative 44.8 percent on the Las Vegas “Strip”, negative 43.7 $3,000,000,000 percent Downtown and negative 43.0 percent on the Boulder Strip.
$2,000,000,000
In the first quarter of 2020, taxable sales in the leisure and $1, 000,000,000
hospitality sector grew by negative 17.5 percent year-over-year $0 3 Q 2018 4 Q 2018 1 Q 2019 2 Q 2019 3 Q 2019 4 Q 2019 1 Q 2020 2 Q 2020 to $2.44 billion. This included $176.5 million of taxable sales in accommodations, $52.2 million in amusement, gambling and recreation, $12.6 million in performing arts and spectator sports and $2.2 billion in eating and drinking places. Employment in the leisure and hospitality sector was 169,100 in May 2020, Sales vs. Price Per Unit compared to 297,500 in May 2019, a 43.2 percent decrease. 12, 000 $1, 200,000
As employees are brought back in June and July following the 10,000 $1, 000,000
mandated closures, employment numbers should rebound. 8,000 $800, 000
6,000 $600, 000 Completions were light in the second quarter of 2020, totaling 4,000 $400,000 291 units, and are insignificant compared to the temporary 2,000 $200,000 closure of the new Virgin Hotels Las Vegas for renovations. In 0 $0 3 Q 2018 4 Q 2018 1 Q 2019 2 Q 2019 3 Q 2019 4 Q 2019 1 Q 2020 2 Q 2020 properties with 100 or more rooms, inventory in the second Sales (Units) Average Price Per Unit quarter of 2020 was 142,225 units, compared to 143,251 units in the second quarter of 2019. Construction continued on the
Market Health Data Point 2016 2017 2018 2019 2020 Visitor Volume 17.96 17.58 17.45 17.53 8.67 (millions; Jan-May) Room Occupancy 88.3% 89.0% 88.4% 88.9% 43.4% (Jan-May)
ADR (Jan-May) $128.45 $134.10 $133.40 $138.29 $110.11
RevPAR (Jan-May) $113.26 $119.47 $117.90 $122.69 $61.29
Convention Attendance 3.05 3.13 3.01 3.03 1.73 (millions; Jan-May) Passengers McCarran Int’l 19.13 19.59 20.19 20.79 10.63 (millions; Jan-May) Gaming Revenue (Clark County; $4.06 $4.23 $4.40 $4.28 $2.36 billions; Jan-May) Gaming Revenue $2.61 $2.70 $2.81 $2.68 $1.48 (“Strip”; millions; Jan-May)
Data from Las Vegas Convention & Visitors Authority
2 Las Vegas Research & Forecast Report | Q2 2020 | Hospitality | Colliers International 3,500-unit Resorts World Las Vegas, but was halted on the 3,719-unit The Drew Las Vegas on the Las Vegas “Strip”. In total, there were 5,639 units of hospitality space under construction or planned to begin construction within the next 12 months.
In addition to new property development, Southern Nevada was slated for over $1 billion in property remodels and renovations over the next two years, including renovations at the Red Rock Casino Resort Spa, Virgin Hotels Las Vegas, Downtown Grand, South Point, Circa Resort & Casino and Wynn Las Vegas. New venues totaling $3.43 billion are slated for completion in the next two years, including the expansion of the Las Vegas Convention Center, the new Caesars Forum convention center, the expansion of the MGM Grand conference center, Allegiant Stadium, which will host the NFL Las Vegas Raiders, Madison Square Garden’s Sphere Arena and an expansion of the Showcase Mall on the Las Vegas “Strip”.
Hospitality Sales*
Year Sales Volume Units Sold Price/Unit
2020 YTD $5,129.4 MM 11,090 $462,521
2019 $5,320.1 MM 9,214 $577,391
2018 $1,355.6 MM 5,351 $253,000
2017 $917.4 MM 6,626 $138,000
2016 $1,221.8 MM 4,776 $254,000
2015 $466.2 MM 5,445 $86,000
2014 $2,001.3 MM 7,614 $263,000
2013 $57.8 MM 1,335 $43,000
* Only includes properties with 100 or more units, arm’s-length sales
There were no new hospitality sales in the second quarter of 2020. For 2020 as a whole, 11,090 hospitality units sold with a sales volume of $5.1 billion and a price per unit of $462,521. This nearly equals sales volume in 2019 as a whole, which itself came primarily from major sales that occurred in the fourth quarter of that year. As fourth quarter sales dominated 2019, first quarter sales will probably dominate 2020.
The closure of hospitality properties in Southern Nevada for more than two months was unprecedented and had an obvious negative impact on the hospitality industry in particular, and the Valley’s economy in general. Just how permanent this damage will be is unknown, as properties only began re-opening in June 2020 and we lack visitation and revenue data for those re-openings. There is anecdotal data suggesting that visitor volume in June was more than was expected by property operators, but the potential for further travel restrictions, and the lack of business travel’s impact on the local convention industry make it difficult to predict how quickly the Valley’s hospitality industry will bounce back. For now, we remain in “wait-and-see” mode, a fact unlikely to stimulate investment in hospitality properties in the near term.
3 Las Vegas Research & Forecast Report | Q2 2020 | Hospitality | Colliers International Significant Hotel Sale Activity
2 Circus Circus Hotel & Casino $825,000,000 O TH 3,767 Units - $219,007/Unit O TH EST LAS VEGAS October 2019 Casino Hotel - Strip