COVID-19's effect on the Las Vegas Strip *value problem"

[go_buccos]

One author's take:

https://www.fool.com/investing/2020/...gas-strip.aspx

I'm really hoping that when things do get back to normal that cooler heads will prevail with regard to the nickeling-and-diming of the customers that has become so prevalent in a city that for ages was known for value. Maybe we'll get a brief break from the 6:5 blackjack, 6/5 JOB, resort/parking fees, etc.

Personally, I disagree with Mr. Hwang's assertion that it could be 6-12 months before the Strip reopens at all, but I do agree that it will be a shell of its usual self until there's a vaccine.

I think the best way to do that would be a bankruptcy and forced asset liquidation of one or both of the "Big 2." (MGM or Caesars)

MGM has a much more solid cash position than Caesars, but their fixed costs are also much higher.

I think Reno may come back stronger initially, as its business is not nearly as dependent on air travel as Las Vegas,

Curious as to others' thoughts.

[Walter Sobchak]

One author's take:

https://www.fool.com/investing/2020/...gas-strip.aspx

I'm really hoping that when things do get back to normal that cooler heads will prevail with regard to the nickeling-and-diming of the customers that has become so prevalent in a city that for ages was known for value. Maybe we'll get a brief break from the 6:5 blackjack, 6/5 JOB, resort/parking fees, etc.

Personally, I disagree with Mr. Hwang's assertion that it could be 6-12 months before the Strip reopens at all, but I do agree that it will be a shell of its usual self until there's a vaccine.

I think the best way to do that would be a bankruptcy and forced asset liquidation of one or both of the "Big 2." (MGM or Caesars)

MGM has a much more solid cash position than Caesars, but their fixed costs are also much higher.


I think Reno may come back stronger initially, as its business is not nearly as dependent on air travel as Las Vegas,

Curious as to others' thoughts.

My thought is don't read the Motley Fool.

[Dan Druff]

I've disagreed with this author before. Most recently, last year:

Embedded Tweet

https://twitter.com/twt/status/1100088114532380672

Here's what I wrote back on Twitter:

Jeff, while we are on the "same side", I must disagree with your conclusions.

Vegas has killed the value of gambling games because they realized the typical gambler has changed. In the 60s-80s, most gamblers had a clue. From the 90s on, the rec gambler knows very little.

Vegas casinos have accurately determined that 2010s gamblers are more interested in "getting lucky" opportunities than they are a low house edge.

In fact, the recent model calls for softly pushing out any player with a remote clue, even if not an advantage player.

I run into this myself all the time. I advise friends where the best-rule blackjack games are, only to hear that those casinos were "unlucky", and they prefer to play a 6:5 with a sidebet in a "luckier" place. That's who Vegas wants.

Regarding the hotel nickel-and-diming, I mostly agree with you, but unfortunately this is a result of the hotel search engine price war, and hotels feel they need to display the lowest "base" price possible to survive.

This needs to be made illegal or it will never stop.

In short, I feel that this Jeff Hwang guy understands the problems, but not the reasons for them.

I'll post my thoughts on the recent article you posted, shortly...

[Dan Druff]

One author's take:

https://www.fool.com/investing/2020/...gas-strip.aspx

I'm really hoping that when things do get back to normal that cooler heads will prevail with regard to the nickeling-and-diming of the customers that has become so prevalent in a city that for ages was known for value. Maybe we'll get a brief break from the 6:5 blackjack, 6/5 JOB, resort/parking fees, etc.

Personally, I disagree with Mr. Hwang's assertion that it could be 6-12 months before the Strip reopens at all, but I do agree that it will be a shell of its usual self until there's a vaccine.

I think the best way to do that would be a bankruptcy and forced asset liquidation of one or both of the "Big 2." (MGM or Caesars)

MGM has a much more solid cash position than Caesars, but their fixed costs are also much higher.

I think Reno may come back stronger initially, as its business is not nearly as dependent on air travel as Las Vegas,

Curious as to others' thoughts.

I actually agree with him that the strip reopening could be a lot farther away than people think. Maybe not 6-12 months, but they also can't just throw the doors open on May 1 and pretend it will all be fine. That won't fly. Doing this sort of thing would destroy the gains we are starting to see from social distancing.

I also agree that the more annoying parts of the typical visitor's experience -- parking charges, hidden fees, resort fees, lack of budget options, could be eliminated or reduced as a way to entice people to come back. That might very well happen, especially if the opening happens in a questionable COVID-19 circumstance where the case/death rate is down, but we still don't have a treatment or vaccine.

However, we won't see better value gaming or the elimination of 6:5 blackjack. Why? Because most gamblers don't know the difference. This was my issue with Jeff's article before. He thought part of the reason Vegas was struggling was in part due to the lack of value of modern gaming. He was looking at it from the eyes of a knowledgeable gambler, and not from the eyes of a recreational Las Vegas visitor.

The average Vegas visitor in 1985 was fairly gambling-savvy. The average Vegas visitor in 2020 is not at all. Also, gambling has become less and less of the main focus of Las Vegas, which drives more non-gaming Vegas visits (such as conventions), which in turn leads to lack of awareness of what makes a good or bad game in the casino. These type of people just hit the tables or the machines as a diversion while they're in Vegas, but in reality they don't know what they're doing.

In short, it's possible the nickel and diming will go away, but the bad games are here to stay.

[Walter Sobchak]

One author's take:

https://www.fool.com/investing/2020/...gas-strip.aspx

I'm really hoping that when things do get back to normal that cooler heads will prevail with regard to the nickeling-and-diming of the customers that has become so prevalent in a city that for ages was known for value. Maybe we'll get a brief break from the 6:5 blackjack, 6/5 JOB, resort/parking fees, etc.

Personally, I disagree with Mr. Hwang's assertion that it could be 6-12 months before the Strip reopens at all, but I do agree that it will be a shell of its usual self until there's a vaccine.

I think the best way to do that would be a bankruptcy and forced asset liquidation of one or both of the "Big 2." (MGM or Caesars)

MGM has a much more solid cash position than Caesars, but their fixed costs are also much higher.

I think Reno may come back stronger initially, as its business is not nearly as dependent on air travel as Las Vegas,

Curious as to others' thoughts.

I actually agree with him that the strip reopening could be a lot farther away than people think. Maybe not 6-12 months, but they also can't just throw the doors open on May 1 and pretend it will all be fine. That won't fly. Doing this sort of thing would destroy the gains we are starting to see from social distancing.

I also agree that the more annoying parts of the typical visitor's experience -- parking charges, hidden fees, resort fees, lack of budget options, could be eliminated or reduced as a way to entice people to come back. That might very well happen, especially if the opening happens in a questionable COVID-19 circumstance where the case/death rate is down, but we still don't have a treatment or vaccine.

However, we won't see better value gaming or the elimination of 6:5 blackjack. Why? Because most gamblers don't know the difference. This was my issue with Jeff's article before. He thought part of the reason Vegas was struggling was in part due to the lack of value of modern gaming. He was looking at it from the eyes of a knowledgeable gambler, and not from the eyes of a recreational Las Vegas visitor.

The average Vegas visitor in 1985 was fairly gambling-savvy. The average Vegas visitor in 2020 is not at all. Also, gambling has become less and less of the main focus of Las Vegas, which drives more non-gaming Vegas visits (such as conventions), which in turn leads to lack of awareness of what makes a good or bad game in the casino. These type of people just hit the tables or the machines as a diversion while they're in Vegas, but in reality they don't know what they're doing.

In short, it's possible the nickel and diming will go away, but the bad games are here to stay.

Will you say the same thing when Trump declares the crisis over and says everybody should go back to normal, because he doesn't want it to affect his election chances?

[sonatine]

im not going to read trash micro economics circle jerking about a niche economy but i will point out that vegas is just disney with tits minus the streaming content equity so place your bets accordingly.

[TheXFactor]

The Las Vegas strip will not be re-opening on May 1st.

The Governor of Nevada will probably continue the statewide emergency for another month until June 1st.

Everyone entering a casino will have to pass through special security checks. They will take your temperature and they may offer you a mask with their logo on it.

I seriously doubt the casinos will change the odds in blackjack or on any of their slot machines. They may offer more comps and a discounted room but that's about it.

I'm sure it will take a long time for most people to return.

[Crowe Diddly]

[OSA]

I looked into hotel rates for Sept and Oct and its pretty much normal rates. I assume they feel that demand is going to be huge around that time to justify people spending that kinda money.

And I trust your judgement Todd, but I think people are more knowledgeable and smarter when it comes to nickel and diming casinos for value etc. There's more info that is easily accessible which allows you to make more educated decisions. The last 3 times I been to Vegas, I have left up all 3 times gambling wise. This is why casinos have to build fees into stays such as resort fees, parking etc to compensate.

[Dan Druff]

I looked into hotel rates for Sept and Oct and its pretty much normal rates. I assume they feel that demand is going to be huge around that time to justify people spending that kinda money.

And I trust your judgement Todd, but I think people are more knowledgeable and smarter when it comes to nickel and diming casinos for value etc. There's more info that is easily accessible which allows you to make more educated decisions. The last 3 times I been to Vegas, I have left up all 3 times gambling wise. This is why casinos have to build fees into stays such as resort fees, parking etc to compensate.

Come on OSA, let's think for a second.

Rates are high right now because why the fuck wouldn't they be? Sept/Oct are far away right now. You pay the bulk of your hotel bill at the END of your stay. There's no reason to incentivize bookings for the fall at this point via bargain prices, because all they're doing is committing those rooms for a low price, with very little current upside.

We've never been through this type of thing before, so they need to remain as flexible as possible.

For example, what if they reopen on August 1, and all the degens are itching to go to Vegas? I actually know some people like this, who tell me they'll go at the very first opportunity. In that case, if there's a huge rush of bookings when they reopen, they will NOT want to keep the prices low. On the flip side, if most people are terrified to go back to Vegas when they reopen, they will need to drop prices to the point where the temptation to return is high enough. They simply don't know where it stands right now.

Regarding you "leaving up all 3 times, gambling wise", unless it was from poker (and unless you were a favorite in those games), then you were -EV to finish ahead. It doesn't matter to Vegas if you get lucky on them three times in a row, because they have deep enough pockets and enough gamblers to where variance smooths out -- especially at the limits you play. Your odds to win are WORSE today than 20 years ago, because the games have been degraded.

Why do they nickel-and-dime? Because some MBA bean counter decided they could get away with it, and then all of the rest of the resorts followed. I've long asserted that this was a long-term mistake, because these obnoxious tactics stick with travelers, and they're less likely to return. BTW, this is exactly why Superjew Sheldon chose not to ever charge for parking at Venetian, and instead they bleed customers via triple-zero roulette.

[TheXFactor]

You are delusional if you think that Las Vegas casinos are going to open any time soon.

How about this headline...A dozen people test positive with coronavirus at Bellagio.

Or how about this headline...Five employees of Caesar's Palace die of coronavirus a month after re-opening.

The casinos are going to be cautious, 6 to 12 months is a more reasonable time frame.

MGM resorts may be bankrupt by then.

[Daly]

You are delusional if you think that Las Vegas casinos are going to open any time soon.

How about this headline...A dozen people test positive with coronavirus at Bellagio.

Or how about this headline...Five employees of Caesar's Palace die of coronavirus a month after re-opening.

The casinos are going to be cautious, 6 to 12 months is a more reasonable time frame.

MGM resorts may be bankrupt by then.

If MGM Is bankrupt the entire strip will have gone bankrupt.

[TheXFactor]

The Casinos will be fine. You don't re-open in the middle of a pandemic. MGM resorts will issue corporate bonds, similar to "junk bonds" that will pay about 30% interest with a maturity date of 2025. The other casinos will probably do the same.

Greed is Good.

[Sanlmar]

Yeah, MGM & Wynn are over in Macau. Vegas has a big brother and it’s an island off the coast of China.

April revenue over there - even though they reopened in March - just might be the worst numbers yet.


But if you guys weren’t optimists nobody would ever play the slots. I get it.

[Daly]

The Casinos will be fine. You don't re-open in the middle of a pandemic. MGM resorts will issue corporate bonds, similar to "junk bonds" that will pay about 30% interest with a maturity date of 2025. The other casinos will probably do the same.

Greed is Good.

I get the point on your take on casinos and agree with most of it. My point is you must not have looked into MGM balance sheet. You are right RE: Wynn, Caesar’s and LV Sands but not so much MGM. They are cash rich and have a lot of RE equity. If MGM does eventually need a cash raise (which wouldn’t be until 2021 at the earliest) it wouldn’t be junk bond status. The rest..... yeah JUNK

[FRANKRIZZO]

The Casinos will be fine. You don't re-open in the middle of a pandemic. MGM resorts will issue corporate bonds, similar to "junk bonds" that will pay about 30% interest with a maturity date of 2025. The other casinos will probably do the same.

Greed is Good.

Nice looking rug Ilike the combover better though