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Will The Strip Shut Down Again?

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Chris Smith/Desert Companion

Last week Governor Steve Sisolak announced that bars that don’t serve food must revert back to Phase 1 guidelines. This was due to the rise in cases of COVID-19 in Nevada.

On social media, the expectation was another shutdown of the Strip. 

Right after the resorts reopened in early June, videos of unmasked crowds in casinos and pools flooded the Internet -- followed by rumors that certain properties would close up to avoid endangering their employees -- and the bad PR of an outbreak. 

Masks are now required in public, but is it enough? Or are the safety precautions casinos have put in place enough to keep both staff and guests from infections? 

Jeff Hwang, an industry analyst and consultant, has weighed in on this very topic in both articles he writes and social media. 

"We knew this was going to happen," Hwang told KNPR's State of Nevada "[One of] our two biggest problems were A) a lack of standards, like safety standards across the board."

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Hwang explained that some casinos have plexiglass separating gamblers and some don't. Also, some have temperature checks and others are foregoing them. Plus, up until Gov. Steve Sisolak's mandate on face coverings, some required them and others looked the other way.

The second problem, which Hwang believes is even more trouble, is the lack of visitor restrictions. 

"Every place on the planet that has the coronavirus under control has some form of visitor restrictions," he said, "Like Taiwan, Hawaii, Singapore, Hong Kong, Macau - they've all been able to lock down their borders."

However, he noted Las Vegas is open to visitors from everywhere, including Arizona and California, which are both struggling with surging cases, and where the most drive-in tourists come from. 

"Until we can stop visitors from coming in ... [and] stop people from visiting, we are going to continue to see an outbreak," he said.

Hwang maintained that in May, before Las Vegas was open for business again, it was one of the safest places to be. Now, since the city reopened and people have been allowed to visit, cases here are rising fast.

"Right now, we're a little out of control," he said, "It was June 24 when Sisolak announced the face maks mandate - by that point, we had already set records for cases four times in the previous eight days. We had the highest coronavirus transmission rate in the country."

He said any other place on the planet would have already gone back into lockdown, but Nevada has unique problems because the lockdown caused massive unemployment and a state budget shortfall in the billions.

"The read that I have on the governor is that he is basically just buying time at this point," Hwang said, "If virus containment was the priority, we would have shut down weeks ago."

The mandate to shut down bars again has made bar owners unhappy, but others believe it is not enough to really address the problem. 

Hwang believes it is actually a stronger measure than some people think because it will work as a deterrent to people visiting Las Vegas.

"Once you shut down the bars ... you take away the reason people come to Las Vegas to begin with," he said, "So, our whole problem is stopping the flow of infected visitors and once you take away the reason for them to come, you start to stop the flow of visitors."

Short of closing casinos entirely, Hwang believes the move to close bars is about as strong as the state can get. 

While things are still uncertain on the Strip for the short term, most people believe the industry will bounce back. Hwang is not entirely sure.

He noted that while the economy improved in the years since the Great Recession, it never got back to the peak seen in 2007.

"The idea the Strip will snap back and we'll have this great recovery - it is not a given," he said, "We kind of embarrassed ourselves at this moment because ... we're dangerously close to being branded as unsafe. We opened without the proper visitor restrictions in place. We opened without face mask requirements. The NHL was going to come in here and have their playoff bubble here [and] they walked away because we're not safe."

Mike Pequeen is a managing director and partner with Hightower Advisors. He said many of Hwang's comments are "unfortunately, spot on."

He said when he walked through casinos shortly after the reopening, he saw the inconsistencies of rules, and when he walked through the Wynn on the Fourth of July, a majority of people were wearing masks but the resort was packed with people.

"If we grade ourselves, it is going to have to be not great for how we've reopened and how we've handled [it] on a consistency basis between the properties," he said, "It's a little disconcerting to walk into some of these properties and see it looking very similar to how it did six months ago"

While casinos in other markets have closed again, Pequeen said the gaming industry has such political power in Nevada that what the industry wants is what it will get.

However, the future of the industry might be beyond the casinos' hands, he said. Pequeen said unemployment around the country could mean people just don't have the money to spend on a trip to Las Vegas.

"We have a very rocky few months ahead of us at the very least while the national economic situation really becomes clear post-stimulus," he said, "It seems hard to imagine that demand is going to grow from here. It seems that if people don't see some sort of control of our virus infections, and if we don't see some sort of further national economic relief, it seems hard to imagine how our market share grows."

Pequeen is not concerned about the gaming giants like MGM Resorts International, Caesars Entertainment and Las Vegas Sands. He said they won't do well but they will live to tell the tale.

His bigger concern is smaller properties and businesses.

"That's, I think, where the lasting damage to this city will be," he said, "I believe you'll be able to walk into the Bellagio and order a drink in 18 months, but I'm not sure you'll be able to go to the great individual restaurants in Las Vegas or some of the great retail shops."

Overall, Pequeen said three important types of visitors - overseas tourists, convention and meeting attendees, and people coming for nightclubs and live entertainment - need to return for the city to get back up to where it was.   

"Those are the big things, the big sleeping giants, that we need to see reawaken to get anywhere close to where we were."

Guests

Jeff Hwang, industry analyst and consultant; Mike Pequeen, managing director and partner, Hightower Advisors.

 

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