Las Vegas: The Unfolding Economic Impact of COVID-19
Travel and tourism have taken a big hit since the COVID-19 pandemic struck and social-distancing precautions followed. One place intensely feeling the economic downturn is the Las Vegas-Henderson-Paradise, Nevada metro statistical area (MSA). In addition to the financial pain, Clark County, where Las Vegas is located, includes 753 of the 1,008 coronavirus cases in Nevada and 14 of the 17 resulting deaths, as of March 30.
To measure the impact of the pandemic, ThinkWhy targeted six deeply affected U.S. MSAs, including Las Vegas, for a proprietary survey conducted by ThinkWhy Research. Between March 14 and March 19, we collected data from 500 business leaders. The businesses surveyed have from 21 to more than 3,000 employees and represent every major industry.
Prior to the pandemic, Las Vegas ranked as the 28th healthiest market in the country on ThinkWhy’s LaborIQ™ Rankings Index, with Leisure and Hospitality accounting for 28 percent of the metro’s jobs. This sector has experienced an immediate decline brought on by the mandated closure on March 17 of nonessential businesses, including casinos and other tourist-oriented entertainment venues, by Nevada Gov. Steve Sisolak.
Although an economic slowdown was expected in Las Vegas in 2020, the pandemic will no doubt accelerate it. Typically producing 27,200 jobs annually, the metro was forecasted to see that number drop this year to 18,000. With the appearance of COVID-19, the decline is bound to be worse than that.
Las Vegas Business Leaders Remain Optimistic
According to the ThinkWhy Research survey, Las Vegas businesses will likely revise their revenue expectations, as 85 percent of respondents indicated some impact to revenue due to the virus. With nearly 24,000 conventions in a typical year, per the Las Vegas Convention and Visitors Authority (LVCVA), revenue earned from expos and conventions – a number of which have been canceled or postponed – will certainly be impacted.
One in two Las Vegas business leaders said they are in an industry that will be negatively impacted by COVID-19. That’s not hard to believe because, according to the LVCVA, a whopping 367,900 southern Nevada jobs are supported by tourism, an industry that has come to a hard stop.
The unfavorable impact on Las Vegas tourism was evident in the survey, with 56.7 percent of business leaders reporting that reduced traffic, online and in-person, will be the most negative impact of COVID-19. Reduced time and attendance of employees came in second, at 50 percent, though it was identified as the No. 1 negative impact in each of the five other MSAs surveyed.
At the time of the ThinkWhy Research survey, 73.3 percent of Las Vegas-area business leaders said the virus would have an intense but short-lived impact. Far fewer respondents thought it would negatively impact their businesses for years to come.
Eighty percent of respondents said their company was doing “everything it can” to prevent the spread of the virus, but just 53.3 percent said the same for the federal government’s response. At the same time, only 56.7 percent of Las Vegas business leaders said their company was adequately prepared to handle the challenges of COVID-19.
Given the $2 trillion coronavirus aid package signed into law by President Trump on March 27, many Las Vegas business leaders may feel a bigger sense of relief, as the new law will provide help for businesses and individuals during this uncertain time. The law includes $350 billion in federally guaranteed loans and grants to small businesses, as well as a $500 billion lending program for mid-sized to large companies.
Among positive changes brought about by COVID-19, 56.7 percent of the respondents identified increased cleanliness, while 70 percent reported improved corporate communications and the creation of critical response teams. Nearly all Las Vegas respondents – 96.7 percent – found their company communications to be acceptable during the pandemic.
Leisure and Hospitality Sees Immediate Downturn
With Leisure and Hospitality experiencing a negative impact nationwide, the Las Vegas metro is especially vulnerable. As a market driven mainly by hospitality -- and with the shutdown of nonessential businesses continuing into April -- expect large hospitality companies to serve fewer guests, close their properties and furlough their workers. Many area businesses are looking for ways to adapt to the new environment.
"We will shut down areas that are no longer used by customers, along with cutting back on staffing as needed," says the operations manager at a small Las Vegas casino. “On the upside, we plan to do some remodeling when business slows down.”
According to the director of operations at a large manufacturing operation in Las Vegas, "We are looking into increasing automation to reduce the need for workers. We anticipate difficulty in staffing the production floor and are looking at how to replace trained workers due to illness or possibly death.
"Increased automation will lower overall labor costs, which we will realize when the facility runs to capacity after the pandemic,” the director goes on. “Of course, the downside is that some will permanently lose jobs."
On a scale of 1-10, where 1 equals strongly disagree and 10 equals strongly agree, 7 out of 10 Las Vegas respondents believe the virus will have a strong impact on the U.S labor market, and 7.4 out of 10 believe it will have a strong impact on the U.S. economy as a whole. Only 6 in 10 believe a quick rebound is in the cards.
Results of the ThinkWhy Research survey from the other MSAs profiled are listed below:
- San Francisco-Oakland-Hayward, California
- New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Seattle-Tacoma-Bellevue, Washington
- Miami-Fort Lauderdale-West Palm Beach, Florida
ThinkWhy continuously monitors and forecasts industries and MSAs for their impact on companies.
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