Las Vegas once again knows it’s good to be king and all over the state of Nevada, the casino industry is breaking financial records. The 274 major casino hotel resorts that report more than $1,000,000 pulled in $2.1 billion in profits for its 2006 fiscal, a nearly 9 percent profit from revenue.
The news broke in the Nevada State Gaming Control Board’s annual Gaming Abstract, -- which was obtained by Hotel Interactive -- showing that revenue generated in these casino properties was $24.08 billion. In fiscal year 2005, profits were $1.8 billion on $21.4 billion in revenue. Total revenue increased by 12.8% for the 2006 fiscal year and net revenue increased by 17%.
"There was substantial growth in all revenue areas, not just gaming," GCB analyst Frank Streshley told the AP.
Gaming, while still the prime generator of revenue, accounts for only 49 percent of total revenue, bringing in $11.8 billion in revenue. Rooms brought in nearly $5 billion accounting for 20.3 percent of revenue while 13.7 percent of revenue was generated from food. Average revenue per casino hotel resort was $87,887,253. In all the casinos shelled out $928.2 million in state gambling tax and license fees.
One the casino floor slot machines brought in the lion’s share of revenue, accounting for 67.2 percent of all gaming revenue. Table games including Keno and Bingo bring in less than 30 percent of revenue. Though pokers still reigns as the most popular and talked about casino game, the revenue it brings in was near negligible, reaping just 1.4 percent of revenue.
The Las Vegas Strip was of course the largest profit generator, pulling in a huge chunk of revenue -- $14.9 billion with a profit of $1.25 billion. Downtown, the casinos saw $1.2 billion in revenue and a profit of $140.6 million.
And indications are 2007 is shaping up to be a banner year as well, according to Bear Sterns analyst Joseph Greff.
“Looking ahead, the convention calendar appears very healthy for the 1Q07, ahead of the 1Q06 in terms of both events and attendance,” he wrote in an analyst letter this morning.
New Years, which is part of fiscal year 2007, was in line with last year, according to Bear Sterns but the quality of play was better. Both on and off the Strip casinos are cutting back on their promotions, a sign of strong business.
Other areas in Nevada also reported big fiscal 2006 earnings.
Casinos in the Reno-Sparks area saw $1.64 billion in revenue with a profit of $112.9 million, as casinos on Lake Tahoe's south shore had $547.8 million in revenue with a profit of $46.2 million. In Carson City-Gardnerville, revenue was a modest $184 million in revenue with a profit of $5.1 million. Elko County had $365.8 million in revenue and a profit of $36.9 million.
There is no indication the market will slow up during the next few years as a slew of new casino projects are set to open alone in Las Vegas. There is more than $30 billion in projects under construction right now and dozens more on the drawing board.
The decision for so many projects to move ahead is based on an almost perfect storm: Occupancy is robust, ADR is booming and players are leaving more money at the tables. According to the Las Vegas Convention and Visitors Authority (LVCVA), occupancy so far this year is at 90.5 percent overall, while on weekends 95.3 percent of rooms are filled. That’s fueled an ADR growth of 16.8 percent during the first half of 2006 alone. At the tables, people’s pocketbooks are 12.2 percent lighter on the Strip than compared to last year as well.
“Las Vegas is a real development hotspot. When a marketplace is at peak occupancy and average room rates are going up, the market is optimized and developers want to build there,” said Patrick Ford, President Lodging Econometrics, lodging real estate specialists based in Portsmouth, NH.
According to Ford there are 18 projects under construction with 18,549 rooms while another 21 projects (14,472 rooms) should start construction during the next 12 months. He said three small hotels will open this year while 15 hotels (6,406 rooms) will open in 2007, 13 projects (5,117 rooms) will open in 2008 while an incredible 35,978 hotels at 28 hotels will debut in 2009 and beyond.
By 2010 there will be 170,000 hotel rooms, up from 140,000 today. Las Vegas reported record visitor volume of 38.5 million people in 2005 --- the most recent numbers available -- and more than 39 million people are expected to visit the city in 2006. The city hopes to attract 43 million visitors to the destination by 2009.
Some notable projects right now are Project CityCenter, a colossal $7 billion resort complex set to open in 2009 smack dab in the heart of the Las Vegas Strip featuring a 60-story, 4,000-room hotel/casino and three 400-room non-gaming boutique hotels; Project Echelon, a $4 billion, 5,300-room resort featuring the 3,300-room Echelon Resort hotel and three other hotels set to open in 2010. Also due are the $1.7 billion Encore at the Wynn Las Vegas and Palazzo, a $1.6 billion sister property to be interconnected with the Venetian. It opens late this year.