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Yes, Pandemic Was Brutal, But Don’t Bet Against Vegas: Joe Mysak

·2 min read

(Bloomberg) -- Taxes on Las Vegas’s 150,000 hotel rooms, which are the economic engine of the city, down 61%. Number of events held at its convention center: down 87%. The amount of revenue spun off by events held at the convention center: down more than 90%.

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The endless nature of the pandemic combined with the lag in financial reporting by states and municipalities means that only now are we getting a complete picture of the destruction wrought by Covid-19 on bond issuers, and the results aren’t pretty. That doesn’t mean that Vegas is permanently broken, though.

The Las Vegas Convention and Visitors Authority is selling $23.6 million in revenue bonds this week to refund a deal it sold in 2019, and the preliminary official statement to the issue provides audited data from fiscal 2020, which ended on June 30 of that year, as well as estimated data from fiscal 2021.

That fiscal 2020 data contains eight months where the picture still looked bright, and then the shutdown, when business ground to a halt. “The first eight months of the fiscal year were strong for the Las Vegas Convention and Visitors Authority,” say the audited financials. “Through the month of March 2020, the LVCVA’s room tax collections were up 5.3% over the prior year, and the Las Vegas metropolitan area had a 4.0% unemployment rate.”

Then the shutdown came, and “no significant conventions were held in calendar year 2020 after March,” as it says in the documents. In January of 2021, the number of visitors to the city began to increase, and July marked the seventh month in a row the nation’s gambling capital gained in visitors. Only after that did the convention business revive, and even then, only fitfully. As it says in the documents, on Sept. 15, the National Association of Broadcasters canceled an event planned for this October.

The pandemic has been brutal for the meetings business. Room taxes dropped from $286.4 million in fiscal 2019 to $111.2 million in 2021. The number of events held at the convention center dropped from 93 in fiscal 2019 to 12 in 2021, and the amount of revenue those events brought in fell to $5.2 million from $54.5 million.

But the pandemic is now entering past tense. Overall visitor volume in Vegas has been rising steeply this year and is nearing 2019 levels. Moody’s Investors Service rated the new bonds Aa3 with a stable outlook, saying the grade “reflects the authority’s entrenched position as the nation’s market leader for large-scale conventions and the area’s substantial tourism amenities throughout the Las Vegas area that will drive a strong return of hotel tax revenue post-pandemic within the next two years.”

Translation: Don’t bet against Las Vegas.

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