Downtown Las Vegas is anxious to reopen. When it does, I think casinos around the Fremont Street Experience do surprisingly well compared to the Las Vegas Strip.
Smaller hotel capacities
There are about 7,200 hotel rooms on or around Fremont Street. To compare, Venetian and Palazzo have about the same number of rooms combined. About one-third of the downtown rooms are at Golden Nugget. It does not take nearly as many guests to turn a profit at downtown casinos as one on the Strip due to the lower overhead in terms of hotel operations. The same applies to other amenities.
Downtown more dependent on gambling
Downtown Las Vegas casinos derive about half of revenues from the casino floor, according to state reporting. Las Vegas Strip casinos only generate about 35 percent of total revenues from gaming. Casino operations are expected to reopen close to normal levels in Downtown Las Vegas.
Tourism will comprise of more gamblers than during normal times due to the lack of other amenities and attractions expected when resorts reopen. This makes the player-friendly gambling more attractive downtown than usual.
Downtown less reliant on convention business
The low predicted occupancy rates on the Strip partially reflect the loss of conventions that have canceled. Downtown Las Vegas is not home to many conventions and has significantly less space for it compared to its competitors on the Strip.
Casinos around Fremont Street benefit from the conventions. Attendees may go downtown to visit or stay there if occupancy on the Strip forces high room rates. This income is important to downtown Las Vegas and will likely contribute to a decline in revenues. However, it will not remotely compare to the losses on Las Vegas Blvd.
Locals patronize downtown more than Strip
It is tough to find locals that frequent the Strip. Paid parking and high prices make it unappealing to those that live in the Las Vegas Valley. On the other hand, downtown is more of a street party with a bar district in Fremont East that is frequented by locals. Local visitation will not be affected in the same way tourism will be during this time.
Downtown casinos have a database of local players, especially Boyd Gaming, which owns seven locals casinos. Offering locals staycation and free play offers may entice residents to visit Fremont Street, especially if nearby locals casinos have not reopened or scale back operations during the first phase.
Fremont Street appeals to younger demographics
The coronavirus is especially dangerous to those in retired age brackets. Fremont Street is not aimed at those tourists. It is a street party where alcohol flows freely all night long. The loss in leisure tourism will likely be heaviest in the older age groups. The younger visitors are more inclined to take the health risks, especially with the hotel rates at recent lows.
Circa will add new life to Fremont Street
Circa is on pace to open in December 2020 on the former site of the Las Vegas Club. Derek Stevens, owner of Golden Gate and The D, is behind the project. It is the first new downtown Las Vegas construction of a resort in decades.
This will create a new attraction on Fremont Street that tourists and locals alike will want to visit. While Circa will not open in the economic environment it hoped, the resort should still benefit from being a part of the market that is less sensitive to the economic downturn than new construction on the Strip will be.
Downtown Las Vegas is a great value
Downtown Las Vegas casinos offer a superior value to those on the Strip. There are four casinos with video poker machines that return over 100 percent. Many craps tables offer 10 times odds. At Main Street Station, it is 20 times odds. Several casinos pay 3:2 on all blackjacks. The minimum bet for table games tends to be $5. Restaurants and retailers are priced in a reasonable range. None of this is true on the Strip.
Not reliant on high rollers
I walked around casinos the last week before the shutdown. The most telling observation on the Strip was a lack of players in high limit salons and slots. These players are extremely important to casinos on the Strip. That is not the case in Downtown Las Vegas. Only three casino – Golden Gate, Golden Nugget and The D – even have high limit salons. None give me the impression that it is a significant business. The minimum bet is usually $25 or $50 in these, compared to $100 or more on the Strip.
Not all great news
There are some issues facing downtown Las Vegas. Tourism throughout the market will be down. Fremont Street will not be immune to this. Its hotels will not be consistently full any time soon.
Downtown Las Vegas is a favorite for tourists from Hawaii. This will hit the Boyd Gaming properties especially hard. The company noted in its latest earnings report that travel advisories from the islands may prevent visitation from there and delay the reopening of its three downtown properties.