Trump’s trade war and the Strip: “You guys are going to feel it”

By: - November 9, 2018 5:35 am

Over the past month several media sources have sounded the alarm that fewer Chinese business groups, tourists and students are visiting the United States, a possible sign that the tensions between the current administration and the People’s Republic has spread beyond the trade war.

The White House levied tariffs of 10 percent on $200 billion of Chinese products in September, with the rate set to increase to 25 percent by the end of the year barring a breakthrough in trade talks. In response, Beijing said it would impose taxes on 5,207 U.S. imports worth about $60 billion, after the two nations had already imposed tariffs on $50 billion worth of other goods before the September sanctions.

But have these consequences of the trade war reached Las Vegas, a city whose largest industries are tied to tourism?

Vanessa Sciarra, Vice President of Legal Affairs and Trade & Investment Policy at The National Foreign Trade Council, said Las Vegas is likely already seeing the effects.

“I think the numbers are going to keep trailing down and I think you guys are going to feel it,” Sciarra said.

“One of the dangers here is that these trade disputes tend to spill over to other areas,” Sciarra said. “Technically speaking, trade and tourism have nothing to do with each other but the reality is we think the Chinese are either telling people not to go to the United States, denying their visas to come here, or Chinese people don’t want to come here because they are afraid to come.”

For the last six months, Sciarra said her group has seen a large drop in university applications, tourism dollars being spent, and business groups coming to the United States. Sciarra said the drop in revenue would likely not be enough to damage the Las Vegas economy right off the bat. But there is “no replacement for the Chinese.”

“It’s a loss of irreplaceable dollars for some time, maybe a long time,” Sciarra said.

Chinese tourist’s who do travel to Las Vegas are likely wealthy high-rollers who drop a lot of cash in the city, said Sciarra.

There is some evidence of fewer dollars being spent by Chinese tourists. Baccarat, the game of choice of many Chinese high rollers, is a key driver of state gaming revenue. It has fallen significantly in the past months, according to David G. Schwartz, Director of the Center for Gaming Research a UNLV.

In September 2013, Strip casinos made nearly $116 million from baccarat. During the same time period this year they made just over $69 million—about a 41 percent decrease.

Schwartz said third-quarter profits have been slipping consistently since July, when tariffs on China were first introduced.

In June baccarat was up 10 percent over June 2017, but baccarat fell more than 16 percent year-over year in July, nearly nine percent in August, and in September, there was a staggering 27 percent fall.

“It’s a small portion of people but it’s a big portion of money,” Schwartz said. “We’re talking tens of millions of dollars a month every year so it would be significant.”

Baccarat, long a significant if erratic part of the Strip’s bottom line, took on a larger importance during the recession, and got Wynn Resorts and Las Vegas Sands through the worst of it, said Schwartz.

Schwartz said it’s hard to say if the drop in revenue is related to tensions with China, but it is possible, as the drop in revenue lines up with the rise in tariffs on China.

In Sciarra’s words, “it totally relates.”

“It’s more collateral damage,” Sciarra said. “No one meant that to happen but it’s not surprising that that’s what would happen.”

Heidi Hayes, director of communications at the Las Vegas Convention and Visitors Authority, told the travel trade publication TTG “there is a lot going on politically and the US doesn’t feel so welcoming from a tourism perspective” but that Las Vegas would fare well because “it’s such a unique destination.”

Passenger counts on direct flights from China to Las Vegas have steadily dropped each month since July, according to flight information from the McCarran International Airport, though they are 14 percent higher overall from last year.

China represents 4.5 percent of Las Vegas’s overall international visitation, said Amanda Peters, a spokeswoman for the LVCA, adding that the LVCA monitors all potential impacts to the tourism industry.

“We are working with the U.S. Travel Association to ensure that lawmakers know the significant economic importance of the travel and tourism industry to our state and the country,” Peters said. “We will continue to aggressively market Las Vegas as the greatest travel destination in the world, while also working to make certain that travel to Las Vegas and the United States is easier and even more enjoyable for our customers.”

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Jeniffer Solis
Jeniffer Solis

Reporter | Jeniffer was born and raised in Las Vegas, Nevada where she attended the University of Nevada, Las Vegas before graduating in 2017 with a B.A in Journalism and Media Studies. While at UNLV she was a senior staff writer for the student newspaper, the UNLV Scarlet and Gray Free Press, and a news reporter for KUNV 91.5 FM, covering everything from the Route 91 shooting to UNLV housing. She has also contributed to the UNLV News Center and worked as a production engineer for several KUNV broadcasts before joining the Nevada Current. She’s an Aries.