Although the effects of government stimulus checks are waning, billionaire businessman Tilman Fertitta believes consumer spending will remain steady through the end of this year.
USA Today Sports)
Economists and investors may want to heed to Fertitta’s words. He’s the chairman of chief executive officer of Landry’s — a sprawling gaming and leisure empire that includes five land-based Golden Nugget casinos and more than 500 restaurants. That indicates he’s uniquely qualified to comment on discretionary spending trends.
You’re going to continue to see money pile into the economy, probably, the rest of the year,” said the Houston Rockets owner in a Tuesday interview with CNBC.
The last round of $1,400 stimulus checks went out in May with many Americans having received that money in the first quarter. That cash was widely viewed as a catalyst for lifting traffic in Las Vegas as well as regional casinos across the country, but analysts worried the positive effects would be fleeting. However, the opposite is proving true as Sin City visitation is surging and Nevada is coming off a record month in terms of gross gaming revenue (GGR).
Two of Fertitta’s five Golden Nugget casinos are in Southern Nevada, including one in downtown Las Vegas.
Roaring Twenties Call
As other market observers have, Fertitta notes the US economy – the world’s largest – is heading for a “Roaring Twenties” setup “for a while.” However, he acknowledges gaming and leisure enterprises could lose some current consumers next year, but there’s a potentially favorable trade-off.
“Then I think what’s going to happen is we’re going to lose some of this consumer, but we’re going to start getting back the business consumer and the conferences, and the big party rooms in New York and LA and all your big cities,” he said in the CNBC interview.
Assuming his call is correct, that would be a major boost for Las Vegas. While executives from some Strip operators note occupancy rates for weekends are close to 100 percent through the remainder of 2021, the Sunday through Wednesday period remains sluggish due to lack of convention business.
In the largest domestic casino center, meetings and conventions are essential to steadying traffic and providing needed revenue in the first four days of the week.
While Fertitta notes traffic is strong at Landry’s higher end restaurants, including Mastro’s and Morton’s, inflation is a scenario that bears monitoring.
According to AAA, the average price for a gallon of regular unleaded gasoline is $3.14, nearly a dollar higher than it was a year ago. In California, that number swells to a staggering $4.30 a gallon. That’s meaningful for Las Vegas operators because neighboring California accounts for almost 20 percent of annual visitation to Sin City and many of those folks drive from Southern California.
Higher fuel costs can prompt consumers to scale back expenditures at places such as casinos and high end restaurants or steer clear of those venues altogether.
Fertitta’s Fertitta Entertainment, the parent company of the Golden Nugget land-based casinos and Landry’s restaurants, is merging with FAST Acquisition (NYSE:FST) to become a publicly traded entity again. Last week, the value of that transaction was increased to $8.6 billion from $6.6 billion following the addition of more restaurants.