- Caesars Entertainment held their Q3 earnings call late last week.
- Among other things, they indicated a plan to bring back parking fees at their Las Vegas properties.
- Parking fees were eliminated up and down the Strip following the return of gaming from the COVID-19 pandemic.
Caesars Entertainment had their first post Eldorado Resorts merger earnings call on Thursday, November 5 and there were plenty of interesting topics addressed. Among these–on October 30, Caesars began charging for parking once again at the company’s reopened properties in Las Vegas.
With the possible exception of resort fees, there are few things that have attracted the ire of longtime Las Vegas visitors as much as parking fees for self parking garages. Prior to the COVID-19 pandemic when Southern Nevada’s tourism and convention industries were booming it was seen as yet another place for gaming companies to extract money out of their customers.
It was definitely a marked change in how Las Vegas does business. For years, Las Vegas in general and the Strip properties in particular were synonymous with ‘acres of free parking’. Even valet parking was complimentary if you didn’t mind the wait for pickup costing only a tip for the driver. This reality didn’t change much as Southern Nevada casinos gradually transformed from ground level parking lots to multi-floor parking garages. It felt like free parking was an inalienable right of living in or visiting Las Vegas.
This changed a few years ago though in reality it wasn’t as dramatic a move as it is often made out to be. Downtown Las Vegas properties had used some form of paid parking for as long as I can remember. You’d get a ticket on your way into the garage and stamp it to ‘validate’ at a self serve machine near the casino cage. It would be good for a generous amount of time like eight hours and if you had been there longer it would cost you a buck or two. When it became standard operating procedure up and down the Las Vegas Strip it caused some griping but didn’t appear to deter business.
Fast forward to March of this year when the Nevada gaming industry began an unprecedented two month shutdown. The forced hiatus of all gaming in the state devastated tourism and when properties began to reopen in early June they felt the need to do anything possible to revive business. All formulated extensive health and safety plans. Many waived resort fees and some opted for generous comps and mailers to longtime customers. They all had their own strategic mix but all of the major Strip properties waived parking fees for self parking.
According to the Caesars earnings call, this kept the parking lots full but also caused some ‘unintended consequences’. Company CEO Tom Reeg was asked by Truist Securities analyst Barry Jonas how customers had responded to the return of paid parking. Reeg’s answer was very interesting:
On the issue of parking, you’ve got a heavy drive-in business now, as I said we’re mid to high 90s occupancy on the weekends as you — and you know that we have kind of 50-yard line real estate on the strip. So we were finding was our best customers were having difficulty finding parking in our garages even if they had a lodging reservation. And so what we wanted to do was to bring back parking for — to bring back parking fees as kind of hurdle so that our best customers can get to the property. If you are significant to Caesars or a customer you are a larger of you’re a local, you’re not paying for parking and to drive home the point that this was for those purposes, and because of the situation that we’ve seen in the radar, we — as we implemented, we said we are going to donate all of our profits from parking for this quarter and next to the local charities that support the community and those that have been displaced by COVID. So the response has been overwhelmingly positive from the city and from our customers.
An upswing in violent crime on the Strip has been a major story for the past several months and one theory for that was the lower room rates available as properties reopened were bring a less desirable crowd. Anthony Curtis in the essential Las Vegas Advisor newsletter articulated this theory:
I’m in and out of casinos and bars daily and I can attest that there’s a
heightened presence of what might be termed an “unsavory element.” We don’t have rioting in the streets and these incidents are by no means the norm, but they’re happening and you need to be aware that they are.
What’s the reason for it all? It’s a combination of many things, all linked to polarizing events that have taken place across the nation. I’m not qualified to take that any further, but I can comment on one idea that’s been making the rounds: The problems are being caused by low room rates.
He then debunks this view:
Yes, according to more than a few who’ve been quoted in the media,
low room rates are attracting the wrong class of visitor. It’s a convenient excuse. It’s also complete nonsense.
Some important facts fly in the face of this idea. For starters, low rates are nothing new. Las Vegas has turned to crisis pricing throughout its history to coax back customers during slowdowns. Heck, twice a year in July and December, even during good times, room rates are slashed to keep visitation propped up. If low rates bring a “bad element,” why hasn’t this effect shown up in any of the many previous discounting periods?
This has been my experience as well. In fact, you might be able to come up with a causal relationship between anti-social and violent behavior and *higher* room rates. The highest room rates are around major events like New Years Eve and Halloween which draw a more rowdy and intoxicated party element than the typical gaming enthusiast or tourist. In the current issue of Las Vegas Advisor, Curtis addresses the return of parking fees at Caesars. He isn’t certain it is here to stay but it sounds like he buys Caesars reasoning to some degree:
I’m surprised by this, but less so than I was before I gave it some thought. We’ve referenced the recent problems with violence on the Strip and I wouldn’t be surprised if this is part of Caesars’ response. Hotel guests, visitors with Nevada ID, and higher-level players club members continue to park for free, so the only ones who pay are out-of-staters who don’t have casino status. While good customers might be lost with this move, it’s also all but guaranteed to keep the riffraff out of their garages and, to an elevated extent, out of their casinos.
There’s no doubt a multiple causality to this and my theory is that much has to do with the unique nature of the COVID-19 pandemic with a lot of bored, unemployed people that have been quarantined for a period of time. You’ve also got a young, rowdy crowd that has typically gravitated toward the various EDM nightclubs but these venues are currently closed and there isn’t much else that they can do. Maybe in an effort to cut payroll expenses there aren’t as many casino security officers on staff as their should be at some properties. There could also be a need for more vigilant policing.
Even so, Reeg’s rationale makes sense. If it is a way for Caesars to help keep undesirables out of their casinos that’s also a good thing. No one likes to be ‘nickled and dimed’ by gaming companies but this is definitely preferable to having the Las Vegas Strip become synonymous with hooliganism and violent crime.