"When the U.S. economy sneezes, Las Vegas catches a cold."Ted Papageorge, Chairperson of the Culinary Workers Union in Las Vegas, interview with The Wall Street Journal.
The tourism industry in Las Vegas, known as the "U.S. economic barometer," has plunged into a severe slump. This year, the number of tourists visiting the city has noticeably decreased, leading analysts to interpret this as a precursor to a slowdown in the overall U.S. economy.
Las Vegas serves as a leading indicator that most sensitively reflects consumer sentiment in the U.S. The city's economy relies absolutely on discretionary spending, such as gambling, high-end restaurants and bars, shopping, and performances, akin to its nickname, "Sin City." Households and corporations tend to cut back on luxury and leisure expenses, such as trips to Las Vegas, when the economy falters. Consequently, the decline in the number of tourists, hotel occupancy rates, and gambling revenue in Las Vegas is considered the fastest and clearest signal that Americans are beginning to tighten their wallets.
On June 10 (local time), according to the Las Vegas Convention and Visitors Authority (LVCVA) and financial information company CoStar, the number of visitors to the city dropped by 6.5% in the first five months of this year compared to the same period last year. The situation appears even more serious for June, which is classified as the onset of the peak season. Hotel room occupancy rates fell by 14.6%, while revenue per available room (RevPAR), which indicates hotel profitability, plummeted by 19.2%.
In the city center known for its casinos and hotels, the gambling revenue in the Strip area also decreased by 3.9%. According to data from Placer.ai, which analyzes mobile phone location data, foot traffic in the Las Vegas Strip area in June this year was down 7.8% compared to the same month last year. The entire city appears to have lost its vitality during what should be one of the peak seasons of the year. The casino industry, which supports the city, is projected to incur losses of about $600 million (approximately 835 billion won) this year.
The primary reason for the dwindling tourist numbers is identified as the rapid increase in prices. Since the pandemic, the average hotel room rate in Las Vegas has skyrocketed by 50%. Food and beverage prices have also soared. The Bellagio hotel faced criticism for charging $26 (approximately 36,000 won) for a bottle of water from its room minibar after this fact became known on social media, sparking backlash over "price gouging." A cheeseburger at a restaurant on the Strip has nearly doubled from $16.95 four years ago to $30.95 today. One tourist shared a post stating, "I paid $14 (approximately 19,500 won) for a bottle of Sprite and $32 (approximately 44,500 won) for a serving of chicken tenders."
There is also an analysis that policies from the Donald Trump administration have dampened the sentiments of international tourists. Programs requiring visa deposits from visitors from certain countries are representative of this. Notably, the harsh remarks made by President Trump toward neighboring countries have negatively impacted the sentiments of Canadian and Mexican tourists. As a result, the number of passengers arriving on flights from Canada through Harry Reid International Airport, the primary airport for Las Vegas, has decreased by 5% compared to the same period last year. Deteriorating U.S.-China relations has also significantly affected Chinese high-roller tourists, who are now opting for Macau instead of Las Vegas. Experts assessed that the difficulties in obtaining tourist visas and the tense political climate between the two countries have removed the reasons for these high rollers to insist on visiting the U.S.
The slump in the tourism industry is directly threatening the livelihoods of workers in Las Vegas. According to research from the University of Nevada, approximately 180,000 of the 2.2 million people in the Las Vegas metropolitan area rely on tip income for their livelihoods. Some of these individuals told The Wall Street Journal (WSJ) in interviews, "Currently, tip income has plummeted to below half." As the job market, which had been recovering during the endemic, begins to freeze again, data from the U.S. Department of Labor indicates that job growth in the Las Vegas area has started to fall below the national average. According to June data from the Bureau of Labor Statistics (BLS) and the Nevada Department of Employment, Training and Rehabilitation (DETR), the number of jobs in the Las Vegas metropolitan area has decreased by 0.2% compared to the same period last year. This starkly contrasts with the overall U.S. nonfarm employment growth of 147,000 jobs. The hotel and casino union has expressed serious concerns about the potential for large-scale layoffs.
Feeling the sense of crisis, the city has begun to take measures to help itself. Some hotels and resorts have started eliminating extra fees attached here and there to attract guests. The city's tourism department is going all-out to attract large sporting events like Formula 1 Grand Prix and the Super Bowl to reduce dependency on the sin industry. This strategy aims to draw in new generations of tourists who are not heavily interested in gambling or drinking and to respond to the widespread trend of legalizing sports betting across the U.S.