Las Vegas visitor volume has steadily increased since the pandemic lows of early 2020, but economic researchers from UNLV predict tourist activity will dip next year.
In 2019, the last pre-pandemic year, Las Vegas welcomed more than 42 million visitors, according to the Las Vegas Convention and Visitors Authority. That number was roughly cut half in 2020 due to the pandemic.
Last year, Las Vegas welcomed more than 32 million visitors.
Las Vegas is expected to draw nearly 38 million visitors this year, but that pace is projected to slow in 2023, according to the latest economic outlook report released Wednesday by the UNLV Center for Business and Economic Research.
Visitation is expected to diminish next year by nearly 2% from this year’s projection, according to UNLV’s researchers.
“We’re still going sideways,” said Stephen Miller, an economics professor at UNLV and director of research for the center. “I know people see that gaming revenues are at a record, over $1 billion, but (visitation) isn’t really going up. If you want growth, you need that number to go up.”
Miller, speaking at an economic forum Wednesday morning at the Thomas & Mack Center, said Las Vegas has not experienced a single overall economic recovery but multiple small recoveries.
Miller said the two obvious missing links for a full recovery of the tourism economy were international travel — some remain leery of international travel and variants of the coronavirus continue to be disruptive in places around the globe — and the convention sector.
About 6.6 million people attended a convention or trade show in Las Vegas in 2019 compared to 1.7 million in 2020 and 2.2 million last year, according to the LVCVA.
“I think everybody in this room probably knows that our problems are international visitors and conventions,” Miller said. “Drive-ins (from nearby states), those are doing well, and (visitations) from the rest of the country are alright. A lot of places are busy in town. Things are getting back to normal, but it’s going to be a new normal. The economy will have a new structure.”
A variant of the virus could cause more problems with the region’s recovery, Miller and others noted during the presentation.
“The virus is still here, and we could still have problems,” Miller said. “We have not completely conquered the virus.”
In the report, researchers noted there is “some risk” that Southern Nevada could fall into another recession, though it remains a “small” likelihood.
Housing issues
While Miller communicated guarded optimism about the future of the Las Vegas economy, the report said “the future remains more uncertain than ever.”
Perhaps nowhere is that uncertainty more prevalent than with the housing market.
In Las Vegas, the median price for an existing detached home was $460,000 in March, a record for the area and a 27% increase from the same month in 2021.
Many metro areas in the U.S. have seen home values rise by 20% or more in the past year.
That’s been welcome news for many homeowners, but the rising cost of a home — especially affordably-price starter homes — has been a barrier for many seeking to enter the market.
Jamie Woodwell, a vice president for the Mortgage Bankers Association’s Research and Economics Group, said there were simply more buyers than sellers.
“Right now, the housing market is just incredibly tight,” Woodwell said. “That’s a fundamental mismatch until we’re able to build more housing (nationwide). Developers are working on it. That should help the situation some but, overall, we’re continuing to see strong demand from first-time homebuyers.”
Rising prices
Inflation, the rate of the rise of prices over a given period, has also soared in recent months.
In March, the Consumer Price Index rose 8.5%, which marked a 40-year high for the monthly tally, according to the Bureau of Labor Statistics. Prices for gasoline and food have skyrocketed.
Mary Daly, president of the Federal Reserve Bank of San Francisco and a featured speaker at the forum, said she remained optimistic about the fundamentals of the U.S. economy.
Daly, who had not traveled to Las Vegas since before the pandemic, said she noticed a bustling city and airport.
“I’m thrilled to see that Las Vegas seems back in so many ways,” Daly said. “Signs of (economic) health are everywhere. The job market is robust, household and business balance sheets are strong, and consumer and business sentiments, their confidence, are solid. That’s all despite the war in Ukraine and the rising prices at the gas pump.”
Still, many Americans are “going to bed worried about whether their incomes will keep up with the rising costs of rent, food and fuel,” Daly said.
She said continued supply chain issues, along with the effects of the war in the Ukraine on energy prices, have also fueled higher prices for consumers.
“Long periods of inflation can seep into people’s expectations, leading everyone to anticipate further price increases,” Daly said.
She said long-range expectations — three to five years out — were that inflation would ease close to the Fed’s goal of an annual 2% increase.
“The numbers on longer-run expectations are reassuring,” Daly said. “But we cannot be complacent. We learned this lesson the hard way in the 1970s — the last time we experienced this level of inflation. Americans faced a steady drumbeat of rising prices that lasted over a decade. To get things under control, the Federal Reserve had to implement a series of steep interest rate hikes.”
The hikes worked, but the ensuing economic correction that took place in the U.S. was painful, Daly said.
It’s a history “nobody wants to repeat,” which is why the Fed is widely expected to continue to introduce interest rate hikes in the coming months, Daly said.
“If we slam the brakes on the economy by adjusting rates too quickly or too much, we risk forcing unnecessary adjustments by businesses and households, potentially tipping the economy into recession,” Daly said. “If we ease on the brakes by methodically removing accommodation and regularly assessing how much more is needed, we have a good chance of gliding the economy to a sustainable path.”
UNLV’s Lied Center for Real Estate teamed with CBER to compile the report.