Casinos Could Be Crimped By High Gas Prices, Bigger Concern for Travelers Than COVID-19

Posted on: May 26, 2022, 10:53h. 

Last updated on: May 26, 2022, 11:10h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Memorial Day Weekend is here, marking the start of the summer travel season. But soaring gas prices will factor into consumers’ plans, potentially weighing on the casino industry in the process.

gas prices
Part of the Las Vegas Strip. High gas prices could keep travelers away from casinos this summer. (Image: Bloomberg)

In fact, a new survey by the American Hotel & Lodging Association (AHLA) indicates 90% of would-be travelers are concerned about surging fuel costs and inflation — well ahead of the 78% that say they are concerned with COVID-19 case counts in the destinations they’re considering visiting.

New concerns about gas prices and inflation, however, are impacting Americans’ travel plans in a variety of ways,” according to AHLA. “Majorities say they are likely to take fewer leisure trips (57%) and shorter trips (54%) due to current gas prices, while 44% are likely to postpone trips, and 33% are likely to cancel with no plans to reschedule. 82% say gas prices will have at least some impact on their travel destination(s).”

Data confirms the US casino industry set revenue records in the first quarter, and that some of the momentum carried over into April and May. But analysts and gaming executives believe it’s only matter of time of time before gas prices and inflation weigh on demand.

Gas Issue Legitimate Concern for Casino Operators

Data indicates Las Vegas is on fire. But even that scenario could have a finite shelf life against the backdrop of high fuel costs.

Owing to higher gas prices, 57% of travelers are likely to take fewer trips, while 54% are likely to cut vacations short to save money, notes AHLA. Another 44% are likely to delay traveling, while a third will outright cancel travel plans, says the trade group.

Specific to Las Vegas, high gas prices are a credible issue, because roughly 20% of annual visitors to the US casino center come from California, and many of them drive to Sin City. Golden State gas prices recently topped the ominous $6 per gallon mark — a price point millions of Southern Californians have been dealing with for months.

Regional and tribal casinos — regardless of location — are also seen as vulnerable to punishing gas prices. The reasoning is simple. Visitors to those venues are typically making day trips, and driving to do so.

Some Bright Spots for Casino Industry

Gas prices and the ensuing impact on travel and leisure segments are impossible to ignore. But there are some encouraging signs for the industry, including gaming operators, in the AHLA survey.

The polls confirms 69% of Americans are likely to travel this summer, and a comparable percentage have a greater appreciation for travel following the coronavirus pandemic.

“The pandemic has instilled in most people a greater appreciation for travel, and that’s reflected in the plans Americans are making to get out and about this summer. But just as COVID’s negative impact on travel is starting to wane, a new set of challenges is emerging in the form of historic inflation and record high gas prices,” said AHLA CEO and president Chip Rogers in a statement.