Thanks to visitors of Las Vegas, Southern Nevada's tourism industry got a boost in gaming and non-gaming activities in 2013. These trends are expected to continue into 2014 according to a report released today from the UNLV Center for Business & Economic Research (CBER).
UNLV economists report a positive economic outlook for 2014 and 2015 but cautioned the economy continues to grow at a slow pace. Gaming, real estate and construction industries are not expected to bounce back to pre-recession levels of 2007.
Las Vegas must look beyond its hospitality industry to get people to move back to town, said Stephen Brown, economist and director of CBER said.
"We're on a path of becoming a destination for holding companies," Brown said, attributing some of the improved economic conditions to employment growth in the management of companies for gaming, energy, and finance. This sector has grown 8 percent annually since 1990. Total employment increased by 3.6 percent in 2013.
"The rapid growth of construction, tourism, gaming, hospitality industries prior to 2007 crowded out potential growth in other sectors," Brown said. "Current economic weakness provides an opportunity for future diversification of the Southern Nevada economy."
Overall, visitors are flocking to Las Vegas - mostly by car with a majority from California. CBER's report shows visitors to Vegas in 2012 exceeded levels in 2007 and expect a similar figure for 2013 - a good sign for the economy in 2014. Visitors are spending three times more on non-gaming activities such as entertainment, dining and retail shopping than gaming. Non-gaming revenue has increased by 28.2 percent since 2009, signaling a change in visitor spending habits and a long-term trend, Brown said.
Even as visitor volume held steady in 2013, gaming revenue on the Las Vegas Strip is up 2.5 percent from this time last year. From the peak in 2007, however, Las Vegas Strip gross gaming revenue is down by 9.4 percent. U.S. gaming, however, is above its pre-recession peak, according to the report. Las Vegas' share of gaming revenue is expected to increase albeit slowly in 2014, due to competition from gaming entities around the U.S. and world.
"We're expecting the U.S. economy to accelerate out of sluggishness and as it does, it will create more income for people to visit Las Vegas," Brown said.
Nevada has the highest percentage of homeowners in a negative equity position but remains an affordable place to live. Brown said lower housing prices would help the Nevada economy grow and are not indicative of a depressed market. Rather, the housing prices will drive population growth for Nevada and the western region and attract many people looking to retire. Apartments are available and affordable, so Las Vegas is ready to accommodate a large population increase.
Based on national and regional trends, UNLV economists foresee economic gains in the following areas:
- Moderate gains in employment for 2014 and accelerated gains in 2015. Improvement in the national and international economy, particular in Asia, will boost Southern Nevada's employment growth.
- Clark County visitor volume is expected to rise.
- As the national economy improves, more visitors are expected to spend more money on gaming and non-gaming activities than in 2013.
- Housing prices are not high enough to stimulate construction and home prices are expected to continue to rise.
- Housing permitting will show slow growth in 2014.
- Moderate employment growth in leisure, hospitality and construction. If the national economy continues to improve, Nevada's unemployment rate could fall below 7 percent by end of 2015.