How travel ad spending and revenue tumbled more than 60% in 2020, and why industry sees recovery on the horizon

Arhaq

The house always wins. Except during COVID. 

The Las Vegas Strip shut down last March after Nevada suspended casino and non-essential operations. Casinos reopened at reduced capacity last June, but recovery has been slow.

The number of people visiting Las Vegas fell 55.2% in 2020, according to the Las Vegas Convention and Visitors Authority. Convention attendance in Las Vegas last year tumbled 74.0%.

The year-over-year visitor count for Las Vegas has improved over time as casinos reopened: Visitor volume fell 97.0% in April 2020 vs. a year earlier; visits in January 2021 were down 63.5% vs. a year earlier.

Worldwide ad spending for three major casino operators—Las Vegas Sands Corp., MGM Resorts International, Wynn Resorts—dropped 58.3% in 2020, a bit less severe than the trio’s 67.3% decline in revenue.

For casinos, the sands are shifting.

Las Vegas Sands this month announced it is leaving Las Vegas, selling its prized Strip properties including the Venetian Resort to real estate investment trust Vici Properties and buyout firm Apollo Global Management. The deal came two months after the death of founder, chairman and CEO Sheldon Adelson. The sale will allow Sands to focus on its Macao (China) and Singapore operations, which last year accounted for about 80% of its net revenue.  

During the pandemic, casino operators have continued a push into online gaming.  

Caesars Entertainment last September signed a deal to buy William Hill, a U.K.-based betting and gambling company, in a move to expand Caesars’ sports betting and online gaming. The deal builds on an existing joint venture between the two companies.

Last October, Wynn merged its U.S. online sports betting and gaming business with BetBull, a Europe-based digital sports betting operator, to form Wynn Interactive.

“This transaction positions Wynn Resorts to capitalize on developing opportunities in digital and interactive sports betting and gaming throughout the U.S.,” Wynn said in its annual filing, “by combining Wynn Resorts’ nationally recognized brand with BetBull’s digital sports betting operational capabilities and technology.” Wynn Interactive, 72% owned by Wynn, operates WynnBet, a sports and casino betting app.

MGM and joint venture partner Entain, a sports betting and gaming company based in the Isle of Man, are rolling out a U.S. online sports betting and gaming play, BetMGM. MGM expects BetMGM to be available in about 20 U.S. markets by year-end 2021 with access to about 40% of the U.S. adult population. BetMGM operations scored 2020 net revenue of $178 million, and BetMGM expects 2021 net revenue to more than double. A February 2021 MGM investor presentation said: “BetMGM also expects marketing expenditures to correspond with such acceleration in revenues.”

To be sure, the big casino companies face growing competition from digital sports entertainment and gaming ventures such as DraftKings and Flutter Entertainment’s FanDuel Group.

DraftKings’ worldwide ad spending nearly tripled to $430 million in 2020 from $152 million in 2019. That’s almost the reverse of Las Vegas Sands, MGM and Wynn, which last year cut their combined ad spending to $158 million from $379 million.

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