- The Tropicana Las Vegas has previously announced plans to reopen on September 1, 2020.
- The Tropicana is owned by Penn National Gaming and in their August 6 earnings call the company cast some doubt on reopening plans.
- Speaking generally about the company’s operations, Penn National President & CEO Jay Snowden said “that it may be several months or longer” before full operations resume.
The reopening of Las Vegas and the Nevada gaming industry has been something of a ‘good news/bad news’ scenario. Many Las Vegas properties and attraction are open for business once again and some economic metrics are improving for the city and state. On the other hand, anything approximating pre-shutdown normalcy is far away. That’s evident in the most recent visitor data released by the Las Vegas Convention and Visitors Authority on Friday. Over a million visitors came to Las Vegas in June 2020 which sounds like a hopeful sign until it receives some context–the 1.065 million visitors represents a drop of 70.5% over June 2019 and includes a 100% drop in convention business.
As the visitor economy is taking longer than hoped to recover and the city’s economic rebound anemic at best many properties are revising opening and operational plans. Most casino operators have warned of possible layoffs forthcoming and as we reported awhile back Stations Casinos has indicated that four southern Nevada properties–Texas Station, Fiesta Henderson, Fiesta Rancho and the Palms–might not reopen at all.
Visitor count is only one of many metrics used to measure the health of the Las Vegas tourist economy but none are particularly good right now. One especially concerning stat is the city’s hotel room occupancy rate which is less than half of what it was last year. Since that number is weighted to reflect only the hotels that are open for business that’s all the more ugly:
The occupancy rate was calculated at 40.9 percent, compared to 91.7 percent from June 2019. The LVCVA broke down Strip occupancy at 40.4 percent, downtown Las Vegas at 36.5 percent, weekend occupancy at 51.8 percent and midweek, 36.5 percent. The city routinely hovers between 70 percent and 90 percent in each of those categories.
Because some resorts continue to be closed — most notably, The Mirage, Park MGM, Planet Hollywood and The Cromwell — the LVCVA calculated occupancy rates based on weighted averages for when rooms were open. It used a base number of 95,396 rooms instead of the nearly 150,000 in the usual inventory. It calculated 22,000 rooms open June 1-3, 90,000 rooms on June 4 and 115,000 late in the month.
PENN NATIONAL RECONSIDERING TROPICANA LAS VEGAS REOPENING PLANS
When the Tropicana Las Vegas announced a September 1 reopening date the expectation clearly was that the city’s economic rebound would be further along than it is. The property still has that date posted front and center on the Trop website along with the requisite list of health and safety protocol to be used on reopening. The Tropicana Las Vegas is owned by Penn National Gaming and higher up the corporate food chain there’s starting to be some equivocation about the 9/1/20 reopening date.
Since the Trop and Zia Park in New Mexico are the only Penn National properties still closed there was a lot of talk about it during the company’s August 6 Q2 earnings call. President and CEO Jay Snowden also indicated that the company’s Barstool Sports branded mobile wagering app could be launched in Pennsylvania in September. Clearly the company is bullish on both online casino gaming and sports betting:
In sum, we believe we are extremely well positioned to capture an outsized share of the growing US sports betting and iCasino market. In closing, let me say that despite the ongoing uncertainties with this pandemic, we’re extremely excited for the future and believe all the seeds we planted throughout 2020 will provide a strong foundation for new growth and opportunity ahead.
The Tropicana is a source of far less certainty for Penn National. Investor Relations head Joe Jaffoni created more questions than he answered with this response to a question about plans for the property’s reopening:
Yeah so we plan Joe right now to open the Tropicana property in September. There’s a lot of moving parts. Every day we’re learning and our team on the ground there is continuing to do competitive assessments in terms of ADR and RevPAR occupancy and so we’re going to be really thoughtful around when and how we reopen. As of right now September feels right, but we have several more weeks to nail down an exact date and if it’s not right then we’ll wait a little bit longer to reopen until it is right. These are fluid times. Everything is dynamic and I’m not sure Dave if we have the exact cash burn for Trop and Zia Park, but feel free to jump in there.
An article on the Tropicana reopening date in the Las Vegas Review Journal indicated that some of the metrics they’re keeping an eye on are assess revenue per available room and average daily room rates in the Las Vegas market. You’d have to think that they would also be hesitant to add capacity to the market which is already at such a low room occupancy rate.