Nevada stands to lose $39 billion in economic output should casinos remain closed for 30 to 60 days, and will require 12 to 18 months to recover, according to a report commissioned by the Nevada Resort Association.
The coronavirus pandemic could cost the state more than $1 billion in tax revenue according to the report. The biggest hit — a $503 million drop from the Transient Lodging Tax — which funds education, transportation, marketing and Allegiant Stadium. Lawmakers pledged $750 million in public money to the stadium.
“Respecting that the primary focus of policymakers is rightly placed on ensuring the health and safety of Americans, the economic implications of this crisis appear unprecedented, far-reaching and have the very real potential to cripple the Nevada economy,” Jeremy Aguero of Applied Analysis wrote to Virginia Valentine, president of the Nevada Resort Association.
“Nevada depends more on tourism than Alaska does on oil; Wyoming does on coal mining; or, New York City does on the financial sector,” Valentine wrote in a letter to Nevada’s congressional delegation, which is seeking relief for the tourism industry from the federal government. “Las Vegas, the state’s largest economic center, is more dependent on tourism than Detroit is on auto manufacturing; Seattle is on aerospace; or, Nashville is on music and entertainment.”
Valentine called Nevada the “epicenter of economic devastation caused by COVID-19.”
“We estimate the impact of March and April meetings and convention cancellations is already approaching $2 billion in lost economic activity,” she said.
Gov. Steve Sisolak’s “necessary public safety initiative has immediately put approximately three out of every four positions in Nevada’s tourism industry at risk,” Valentine said.
The report says 320,000 employees in the industry rely on $1.3 billion in monthly wages and salaries.
“In Nevada, more than one in four employees is directly employed within the leisure and hospitality industry, the largest among any sector in the state,” Aguero writes.
“At present, these impacts are being held at bay by companies’ ability to maintain payrolls and employee health benefits while their businesses are effectively shut down. This condition is not sustainable; and, should those efforts subside, Nevada could quickly see its unemployment rate increase above 30 percent and its state output fall by a similar factor,” the report reads.
“The ensuing strain on state and local governments and other service providers, which are
disproportionately reliant on tourism-related tax revenues and will quickly deplete unemployment insurance funds and reserves, would be catastrophic,” the report says. “From our view, there are two potential mitigating factors: (i) the public health crisis subsides more rapidly than health officials currently anticipate or (ii) there is federal intervention that effectively “flattens the curve” for Nevada’s
Nevada’s gaming industry is lobbying to be included in relief from a $150 billion dollar proposed federal bailout that would include the hotel and lodging industry.
“Nevada’s resort industry has been through a number of trying times in its history, including the terrorist events of September 11, 2001, the Great Recession and the tragic October 1, 2017 shooting on the Las Vegas Strip,” the report says. “However, there is no precedent akin to the current situation in our nation or Nevada.”
“To quantify the impacts of COVID-19 on the tourism industry, AA conducted a confidential survey of resort property owners and operators to gauge their current situation and expectations going forward.
“Based on insight from hotel-casino operators themselves, our working knowledge of the tourism industry and feedback from industry professionals, AA developed a consensus COVID-19 impact assessment.”
The report estimates the industry will be “effectively shuttered for 30 to 90 days and the ensuing recovery will require between 12 and 18 months. During this time period, approximately 100,000 person-years of employment (the equivalent of one person employed full-time for one year) is expected to be directly impacted.”