LVCVA Could Face $200M Loss from Coronavirus Pandemic
The Las Vegas Convention and Visitors Authority (LVCVA), which hosts many of Vegas' massive annual conventions, trade shows, and more, could be facing an enormous economic loss due to the coronavirus crisis.
From room tax revenue alone, they expect to see a loss of nearly $200 million, according to their 2021 fiscal budget report.
With Governor Sisolak mandating the statewide closure of all casinos effective March 18 through April 30, as it currently stands, it effectively kneecapped room tax revenue across the state, with the LVCVA feeling the heavy impact of it.
According to LVCVA CEO, Steve Hill, the authority's share of room tax revenue will fall from $300 million to around $100 million, a hefty drop indeed.
Because of the expected losses, Hill asked to reschedule the authority's 2021 fiscal budget presentation for next month.
Hill and the entire authority were looking forward to the direction they were heading in for their 2021 fiscal year, saying that they were set to break records in "a number of different ways," but that's since changed due to the COVID-19 pandemic.
Instead of an exciting fiscal year, one that the authority very much looked forward to, they're not preparing for a year of hardships and the roadblocks ahead.
Room Bookings, Conventions, Meetings and Trade Shows Make Up Bulk of LVCVA Revenue
Here's a fun fact: The Las Vegas Convention and Visitors Authority actually inherit a whopping third of Las Vegas' total room tax revenue. As far as where the other two-thirds of the room revenue is distributed, it goes to supporting local schools and infrastructure projects.
Room tax revenue is where the bulk of where LVCVA's revenue comes from. Another major portion of their revenue, of course, comes from the conventions, meetings and trade shows hosted throughout the year.
Their events are primarily held at the Las Vegas Convention Center, which is going under some major renovations, and other scattered locations throughout the Vegas valley.
Conventions were one of the first things to take a major hit, outside of casinos, because of the coronavirus pandemic. Convention vendors, who normally have jobs lined up for months in a row because of the constant demand, are suddenly out of work.
With event cancellations and postponements, it's uncertain and largely unlikely that these things will be rebooked with the current state of the pandemic. From these traditional events that have been either canceled or postponed, the LVCVA expects to lose out on nearly $60 million, according to Hill.
Hill predicts that even if meetings will be rescheduled, they will probably be in smaller numbers than what they're used to seeing and hosting. He cites "health and safety" as being the prime motivation behind smaller event gatherings.
LVCVA Looking to Where They Can Make Budget Cuts
It's no surprise that the LVCVA is looking to where they can cut costs to offset their economic loss.
Today, the board even approved a $79 million budget cut for its 2020 fiscal year.
As a part of the budget cut, the authority will be furloughing and laying off 350 employees. In an announcement made on Tuesday, LVCVA said the company is furloughing roughly 270 employees and laying off 80 employees.
In total, the organization has 455 employees, so this is a major announcement and company-wide effort being made to make up for losses incurred by the COVID-19 outbreak. That announcement is included in 11 other areas where major cuts are going to be made in an effort to salvage their budget.
Those other areas include the elimination of performance bonuses, which apply to managers and company executives, a hiring freeze, and voluntary early retirement for select employees.
LVCVA Ending Millions Worth of Contracts
In addition to budget cuts, LVCVA also announced that they would be ending $9 million worth of contracts with their tourism ambassadors. They're also putting a halt to the $12 million worth of miscellaneous changes they had planned for their operations.
The $540-million renovation of the convention centers, that was set to be worked up for two years, will also be put on pause.
Two of their Major Projects Will Carry On Despite Budget Cuts
While the authority is making major changes to deal with revenue loss, two of their most visible projects, a $1 billion expansion project, and the $53 million underground people move project, are still hauling forward.
They're still on track to wrap up later this year.
According to LVCVA Chairman Larry Brown, the second tunnel, which is located under the convention center's main entrance, is about halfway done. He added that they're on track to finish at a faster pace than anticipated.
Las Vegas Convention Center to be Used as Makeshift Medical Facility
While the Las Vegas Convention Center has been effectively rendered as non-operational with the current closures, Clark County leaders, along with the Southern Nevada Health District and the valley's hospitals announced their plan to utilize it as an "alternate care center."
The space will be used as a makeshift medical facility as needed for COVID-19 patients, should the hospitals experience an overwhelming surge of patients and maxed-out capacity.
According to Clark County Fire Chief, John Steinbeck, a plan has been prepared in partnership with Army Corps of Engineers to make up to 900 beds available at the Las Vegas Convention Center should the need arise.
Hill, the authority's CEO, said that the Convention Center has been a community resource for years, and the coronavirus pandemic is "no exception.
Well, it's certainly no surprise that the coronavirus crisis is rocking the Las Vegas economy in ways never seen or imagined before.
We commend the industry's ability to fight the good fight and their resourcefulness in keeping their head above water.
While this is a trying time for the gaming and tourism industry, as well as many other industries, we have no doubt that Las Vegas will eventually bounce back even stronger than ever. We only hope that's sooner than later.
Stay safe and healthy out there, everyone!
Tagged: Convention Center, Coronavirus
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