Nevada Week S4 Ep22 | Omicron Variant and Las Vegas Tourism
International travel is back with some exceptions as the new COVID omicron variant looms. How does both international travel and this variant potentially impact our state's recovery? That's this week on Nevada Week. ♪♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt and additional supporting sponsors. (Kipp Ortenburger) Welcome to Nevada Week. Well, progress has been made in the fight against the coronavirus nationally and globally.
Two indicators of this progress are of course the return of international travel just last month and the return of holiday festivities along the Strip. We'll look at both of these later on in the show, but first, the emergence of a new COVID variant is raising concerns about another return to increased transmission and tighter restrictions. I spoke with Brian Labus, assistant professor at the UNLV School of Public Health and member of the governor's COVID-19 task force about this new variant. Brian, thank you for joining us again. We appreciate it. I want to talk specifically about where we are with South Africa right now.
I know the data is maybe not as much as you would have hoped we had, but South Africa is reporting that a third of their cases are the omicron variant right now. They're reporting that twice or more of the spread of delta variant, higher reinfection rates, higher rates with children under five, and yet they're also reporting it's less severe. I mean, I guess you can look at this both ways. Is this encouraging news, or is this ominous news? (Brian Labus) Well, it's hard to see what it really means because South Africa is so different than the United States in terms of their population structure, their vaccination rates and their healthcare and public health systems, so it's hard to say what they're seeing there means for us.
Of course there's a concern because this is a new variant, it could cause problems here, but I think people tend to look past the fact that we still have delta circulating widely in the community. We have something that we can do about it, but people aren't getting vaccinated. So everybody's looking toward this next variant and not dealing with the one that's actually here and causing problems right now. -Because of where we are and we really have these big unknowns, we talked about this on a previous show, how the virus behaves in South Africa is not the same as how the virus behaves in Nevada.
Are we really in a "wait and see" kind of pattern here until we really know how the virus can spread in Nevada? -Well, we know how it spreads, and we know that the vaccine will provide at least some protection against this, against that virus. But we don't know how easily it spreads, we don't know how severe it's going to be, and we don't know the exact protection we'll get from the vaccine. Those are things that we still need to understand to figure out what this means for us. But it has that potential, which is why it's been listed as a variant of concern. We're concerned this could cause some problems here, but we don't know exactly what that means.
-What are your biggest concerns right now over the omicron variant? -Well, I think the biggest problem is vaccine hesitancy. The way out of this pandemic is getting a large percentage of our community vaccinated, and we've really struggled with that over the last few months. People are not getting vaccinated for a number of different reasons, and that basically provides an opportunity for this virus to spread. Natural immunity wears off over time. It's not as strong as once you get vaccinated, so we have people that have gotten the disease and can get it again in a year or so.
-Related to international travel, we saw very swift restrictions right off the bat, of course a lot of closures in South Africa, banning international travel, but there's been other restrictions domestically as well. Is this because of that unknown factor and what the term seems to be, this preemptive strike to then maybe reduce the spread of something like the omicron? -We're trying to do what we can to keep the virus from being introduced into the United States many different times. It's probably going to show up here, but if we can slow it down, we'll have a better idea of what this virus means for us and what we can do to help control it once it gets here. -Per some of the restrictions that we're having domestically, it used to be a COVID negative test three days prior to international travel, and we've reduced that to one. Is that enough to reduce the spread? -Well, I don't think there's any way to keep the virus from actually showing up here.
If you test people, you can always miss it. Some tests are-- all tests are not perfect. You're going to find some false negatives, and it also depends on when you test people. If you test too early, you're going to get a negative and that person shows up a couple days later with the actual symptoms of the illness.
So testing is not the perfect way to keep a virus out of anywhere. It's going to help reduce cases showing up, but it's not going to completely prevent it. And reducing 72 hours to 24 hours provides a little more protection, but this is really about slowing it down. I don't think it's realistic to think this is going to stop it from being introduced in the United States.
-If we are to see more severity of omicron and some of the concerns that, you know, we could potentially have here, what are some of the potential restrictions the CDC or the WHO could recommend to further limit international travel here? -It's hard to say. They typically look at which countries are having problems with it, they look at how bad the spread is in those places, and that's where they put in those restrictions. So it really comes down to adding additional countries to the list.
It's not like there's a lot of other steps between getting tested right before you fly and completely shutting off the border to those countries, which is usually a step we don't want to take. It's a big difference to test people before they leave their country versus just prohibit tourists from any certain place or international travelers from those countries. So there's not a lot between it.
It's really just adding more countries to the list. -Of course South Africa is kind of the regional hotspot right now, but we are seeing other restrictions internationally. Is this going to be more like a potential rolling restriction that we could see, or is it possible we're just going to see blanket restrictions again if the severity is on the level of maybe the delta variant? -Well, the restrictions really are just going to slow down the virus. Like I said, it's not going to prevent it, so putting in a lot of really extreme restrictions really won't do something to stop it from showing up here.
Once it's in the U.S. and it starts to spread here, those restrictions don't necessarily make a lot of sense. So I don't see us shutting down tourism from everywhere. It doesn't really make sense to approach it like that because it's not going to do much other than hurt the economy. It's not like it's going to stop the virus from showing up here if it's already here. It would be like putting in restrictions now about delta.
Well, delta is all we see in the United States, so it doesn't make sense to think about other countries that are having that problem. We usually look at it with those that are having kind of out-of-control rates, and those are the ones that we put some restrictions just because the probability of sick people coming to the U.S. from those countries is just so much higher. -For 600 days international travel to the United States was heavily restricted or non-existent due to COVID concerns.
Well, international travel has been an important part of Las Vegas' business of course, pumping an estimated $4.8 billion into the economy in 2019 alone. In November those travelers were allowed to return, but will the rise of the omicron variant put a damper on that? And with the record-breaking gaming revenue we're seeing thus far in 2021 without international travel of course, is it still a critical factor in economic recovery and normalcy? Well, joining us to talk about international tourism is Josh Swissman, founding partner of the Strategy Organization; Roger Gros, publisher of Global Gaming Business Magazine, and Brendan Bussmann, partner and director of government affairs for Global Market Advisors.
Thank you so much. This is kind of that-- I think Josh, you mentioned the final cog. We've been talking a lot about economic recovery. We've been talking a lot about gaming and hospitality and tourism on this show, and I want to come to that and Brendan, I want to start with you. I mean, is international travel still a must-have here for economic recovery? But let's not forget, we need to be looking at long-term growth for a city like Las Vegas.
(Brendan Bussmann) Absolutely. It's part of the recovery package, but it was obviously before all of this hit. It was a key factor and growth opportunity, and I think, you know, the LVCVA's focus has always been we need to grow the market, we need to grow ADR, we need to grow the industry, and one of the keys to do that is bring new customers into the market. Obviously, as you mentioned, for the last 600 days up until the beginning of November, we haven't had those guests available to us. But now with things opening up and obviously we've seen a little bit of a pullback with the variant and new measures put in place, so that'll be stretched out a little bit, but it's a key aspect, absolutely.
-Roger, let's talk about some of the gaming numbers that we're seeing. I mean, record-breaking numbers, a billion dollars a month eight months straight, it doesn't look like that trend is going to change at all. We're looking for potentially a record-breaking year compared to a record-breaking year of 2019. The public might say with gaming numbers like that, do we really need international travel here? What's your take? (Roger Gros) Well, I think we do.
I think we need to bring that customer back to Las Vegas and then I think once we do, we're going to see the numbers go through the roof. I mean, these customers are not coming to Vegas right now. Certainly the customers from Asia, which really impact the revenue numbers, once they start coming back, you know, it's going to be gangbusters. So I'm excited about where the industry is right now and where it can go. -Josh, I want your take too.
I want to make one reference here. LVCVA, the Las Vegas Convention and Visitors Authority, did a report estimating the total economic loss during COVID of $34 billion they said. Can you give us an idea of how much of that might have been because of international travel? (Josh Swissman) Well, it's tough to break it down incredibly precisely there but I will tell you this: We love international travelers not only because of the gaming contribution, you have to understand when these folks come into town, they stay longer than most any other traveler in any other segment. So on a per-individual basis, they represent a significant contribution again not only from a gaming standpoint, but in terms of room revenue, food and beverage revenue, entertainment revenue and certainly retail revenue.
They really contribute in all of those different factors in different verticals. So while I can't give you an exact figure, I would tell you that the missing international visitation was then and still is today incredibly palpable. -And not just in gaming then obviously, there's many other revenue streams we need to be looking at here.
-That's exactly right. -Brendan, I mean, let's talk maybe about what the typical profile is for an international traveler. As Josh mentioned they stay longer, they might focus on all different aspects of the different industries here in gaming and hospitality.
I mean, can we profile who the typical international traveler is? -You know, there's sort of two segments I'd like to divide that up into because you have your leisure customer that is dying to get over here because they've been cooped up in their home countries forever, it seems like, and they just want to get back out and do something different than being within their borders. It's no different than what you saw here with the domestic travelers with the pent-up demand. You also have that second segment that wants to come to Vegas to do business.
You know, we have CES coming up here in the next month and a host of shows that we hope continue to propel. You know, bringing that international customer back for business is very key as much as the leisure customer. You know, Josh is absolutely right. Those people stay longer, and they're going to spend more over that course of time so it raises the profile across everything, not just from a revenue standpoint for the operators, but eventually from a tax revenue standpoint for the state. -What kind of business is most affected here? Of course we've got trickle down all the way down to our small businesses that are supporting let's say the convention industry. But we're talking about big corporations that have local presence here as well.
I mean, I'm assuming across the board, but is there anybody that's suffering more by not having international travel here? -You know, I think it's really very much across the board. I mean, I think that businesses over the last 18, 20 months, they've had to adapt. They've had to say, you know, I no longer have that international customer, how do I prey off the domestic customer so I continue to get that revenue going? So you've seen our small, large and medium-sized businesses all adapt over the course of the last nearly two years to be able to do that. So those businesses that relied on that in the past and for others in their sweet spot, you're going to see significant growth in them, and that will then in turn go to jobs and more tax revenue and everything else across the way. -And Josh, we can't forget that when we're talking about it might be local casinos that have their headquarters here, but so much interest internationally now in Europe and Asia. So we're not even talking just about international travel here into the U.S.,
we're talking about other markets that are also restricting travel. How much is that affecting our local economy though based on those restrictions? -Well, I think, you know, our local economy is driven significantly by the men and women that are employed on the Strip. So as those jobs suffer as a result of a lack of international visitation, to your point at the beginning, Kipp, there is this trickle down impact that affects not only small businesses but also the relatively large local casino businesses as well, and that's not just-- to your point, it's not just an Asian sort of thing in that regard. That really is impacted by international travel from all parts of the world including Europe.
-I'm going to bring it back domestically, Roger, and let's talk about federal relief here. A lot of experts are saying the reason why we're seeing such big gaming numbers is because we have so much federal relief being brought into the economy right now. That's not going to be here forever. Estimates are one to three years we're going to start to see a trickle down of that money. Does that make then-- assuming that happens and we do see a drop-- international travel even more important at that stage? -Absolutely. I think we have to look at, you know, why people are coming to Vegas.
I think there's a lot of that pent-up demand. I think you see that internationally, too. As Brandon said, they want to get to Las Vegas and have fun, you know. They want to want to break loose from their chains. So I think the more we can appeal to those international travelers, the better it will be for Las Vegas.
-And let's talk specifically about the conventions here. We did a show on G2E, the Global Gaming convention. Sparse, I think, compared to some of the other conventions that we've covered on the show because as I understood, we didn't have the international travelers.
We didn't have the international business. So let's talk about when that business comes back online how that's going to change the convention economy here specifically. -Well, I think, you know, when you have these big shows like CES and the National Association of Broadcasters, when they come to Vegas, those have a lot of international components, so you're going to want to make sure you're wide open by the time you get back here. I mean, we're going to see CES next week without-- or next month without, you know, any international visitation for the most part. I mean, there's still some that were there even at G2E this year. There were some international people that braved the restrictions to come over, and I think you're going to see that more and more as this pent-up demand goes, and also because they need to be here to grow their business.
-Brendan, let's talk about Resorts World also. I think another really interesting case study here, opened in late spring, early summer-- or summer I think it was. Third quarter reports come out, not too rosy for Resorts World right now. Occupancy comparatively significantly low.
How much of that could be attributed maybe to the lack of international travel? -I think part of it's due to the lack of international travel. I think it's lack of at that point meetings and conventions coming back completely. I mean, you talk about G2E, G2E was great. It was great to see a lot of friends back that you haven't seen for basically two years, but it was down.
You didn't have as many international and you didn't have some of the domestic because travel was still up in the air. You know, the other challenge I think the Resorts World factor has, you have a new property on the Strip that necessarily doesn't have a Las Vegas database. I mean, you talk Resorts World to me, I think Singapore, I think Malaysia, then I go to New York, then I go to Birmingham. It's not one of those that I immediately say hey, they're in Las Vegas, other than because I live here and they've been developing this property.
So, you know, I think as they start pulling some of those international guests and you're able to come in and they're able to raise that brand, you'll see that occupancy come up, you'll see the revenue come up, but it just goes to show the challenge you have when you have a new property on the Strip that necessarily doesn't have the database and the ability to bring people in. Even though its proximity to the convention center is going to be great, even though it has that international flair to it, you know, it's going to take time to grow that. -Josh, yes, please. -I'll say to further support Brendan's point there, you know, they didn't have a long lead time to build up this great base of convention business. They still have entertainment venues yet to be open, they still have restaurants yet to be open and that's not unlike any new property opening. The database, or the lack thereof, which is supported with their relationship with Hilton, that makes it even more challenging.
At the same time though, you know, there is a bit of hope there in that they were actually cashflow positive in their first full quarter of operations which is noble and is something that a lot of these big integrated resorts on the Strip and around the world, for that matter, really don't achieve in their first quarter, let alone their first year of operation. So I think they're headed in the right direction. I think they have a lot of tailwinds with return of international travel, with the building up of their convention scheduling and opening of these new assets.
So I wouldn't count them out just yet, not by a long shot. -I want to come back to something you both said that the database is a really interesting piece of this. Our viewers might assume that you have Hilton on your name, doesn't Hilton have a huge database that could bring a lot of potential members there? But that's not the case, I guess.
-Well, it is the case, right? The relationship with Hilton does come with some nice trappings like access to that database, which anecdotally I've heard is upwards of 300-- it's a massive database that does give Resorts World an advantage to drive business to Las Vegas. But you can appreciate that business is very much sort of a leisure traveler and maybe a business traveler there. What they don't really get from Hilton is a gaming database which is tremendously important, particularly on the Las Vegas Strip.
So that is a challenge they're going to have to overcome, but they do get some benefit in the-- I'll say in the nongaming segments through their relationship with Hilton for sure. -When you look at the way the Cosmopolitan failed, you know, to really drive business early on and now of course MGM owns them so now they've got that database, that amazing database. But it took them four or five years really to get some traction before they finally started to turn a profit. -Really interesting.
Roger, I want to go to you. Let's talk a little bit about the omicron variant. Of course this is the biggest concern related to international travel, but this isn't a new thing. We're still in the midst of the delta variant. We cannot forget that. In the previous segment actually, we had an expert talking about that as well.
How concerned are you that omicron can really affect our international travel and more of the midterm, short-term basis here? -You know, it's such a complicated situation when it comes to these variants. I mean, we've heard omicron spreads quicker but it's not as serious in terms of the effects or the complications to the personal health. So I don't really know what's going to happen. I don't pretend to be an expert. I just think we need to move on from this as quickly as we can.
I think the mask mandate is really hurting a lot of Las Vegas. A lot of the people are not comfortable, you know, either wearing or not wearing the mask. So I think as long as we can open up to the international market as quickly as possible and make ourselves welcoming, you know, then we're at the mercy basically of the other countries and what their stipulations are about travel. -Brendan, we have about three more minutes, and I want to come to you.
The comfortability issue is such a big piece of this for international travelers coming here to the U.S. of course too. This might be an issue because there's now a concern for another variant. I mean, is that a major issue why we might see limitations in our international travel? -I think there is, and I look at it twofold. One, the access in and out.
Now that you have a 24-hour mandate-- or really a day I should say because it gives you a little bit of wiggle room there. You know, I have a friend of mine that's coming over from Europe next week, and they've got all their tests but they called me and said how do I get my test back so I can go back home? And I think, you know, for an international traveler coming here, they're weighing okay, what's my risk going in, and risk being how much longer do I have to take on that backside, but then what do I have to do when I come home? And that becomes the more challenge because if you're sitting there going okay, I've got to go quarantine for a week or two weeks on the backside, you're like I can't give up my life to do that potentially. So that's where you see the limitations coming into play. The other thing I'd add to that too is, you know, if we can get more ability to get the PCR tests and those types of things for those people to come back, because that's the biggest question. I know we have a couple spots in and around the Strip to be able to do that, but literally-- I know jurisdictions around the globe that literally the hotels are saying come internationally and we'll give you the test for free. We'll sign you up, and we'll bring the nurse in to do it.
-Interesting. Josh, I want to come to you. Limitation on testing, that's fascinating, especially the turnaround on this. Let's go domestic here. We've got about a minute left, but let's go domestic.
We have domestic potential international travelers that are looking to go abroad, and this might then limit their choices and maybe they're going to decide, I might stay local, and if they stay local, they might come to Las Vegas. I mean, could we see maybe a little bit of a boost here? -You know, it's interesting. I hadn't really thought about it in that way but I am sure, much like Brendan was just talking about international travelers having some second thoughts about coming to the U.S., there are, you know, I have heard again just anecdotally in conversation with friends and colleagues, a bit of that same sort of concern or second thoughts around, you know, jeez, how will I get my test on the way back? My wife and I were just in Mexico, and it was actually quite easy there. We just got our test right there in the hotel, but it's not like that everywhere.
You may actually see a bit of sort of a knock-on bump in visitation there to Las Vegas because of that. I'm sure that would be the case, especially in the short term, right? Typically international travel both ways, whether you're a U.S. citizen going abroad or whether you're international, you know, internationally based coming to the U.S., there are things
that you need to take into account and a longer schedule there. So even in the short term, probably more so than the long term, I think you'll see that added pop. -Well, let's hope so.
That's very hopeful and let's end on that note. Josh, Brendan and Roger, thank you so much. We appreciate all your insight. Well, some people don't really think of Las Vegas when they think about the holidays, but Las Vegas casinos know how to deck the halls for the holidays.
The Nevada Week team checked out the iconic display at the Bellagio Conservatory. At the Bellagio Conservatory and Botanical Gardens, the stunning holiday exhibits convey meaningful messages through plants and props. This year's theme is "Optimism." (Ed Libby) We have a new campaign here at Bellagio called "It's Time," bringing people back to Vegas; it's time to come back to Vegas.
The massive conservatory display titled "Holiday Time" supports the Bellagio's campaign. People have masks on but the restaurants are full, the casino is full, there's plenty of great people enjoying the display. Celebrating this year's holiday exhibit took a lot of time and people. The Bellagio's 120-person horticulture staff, along with a team of designers, engineers and electricians, worked for months to plan for and install the exhibit in the 14,000 square-foot conservatory space.
(Leslie Baeckeroot) We have over 300 shrubs, so there's cypress, pine and junipers, and then we have over 7,000 poinsettia plants that are contract grown for us in a multitude of colors. Around the border of the entire garden are 2,000 senecio angel wing plants. At the center of it all is a real 42-foot silver tip fir tree decked out in 7,000 lights, more than 8,000 ornaments and topped with a four-foot Swarovski crystal tree topper. We have our Arctic critters behind me. For people who are train lovers, we have a Coca-Cola train running around the tree. There's a walk-through experience through a Swiss ski chalet and a great place for photos.
Conservatory designer Ed Libby is thrilled with the positive response to the display. I want to have people walk away from this with a sense of nostalgia and tradition, which is something I think is important these days to just remember simpler times. The Bellagio Conservatory and Botanical Gardens holiday display is free to visit, open 24 hours a day, and runs through January 1, 2022. For Nevada Week, I'm Heather Caputo. Thanks, Heather, and thank you as always for joining us this week on Nevada Week. For any of the resources discussed on this show, please visit our website at vegaspbs.org/nevadaweek.
You can also follow us on Facebook and Twitter at @nevadaweek. Thanks for joining us, and have a safe and happy holiday season. ♪♪♪
2021-12-13 01:20
