United States -  Las Vegas

Overview:

The primary drivers of the Las Vegas economy have been the confluence of tourism, gaming, and conventions, which in turn feed the retail and restaurant sectors. However, a concerted effort has been made by city officials to diversify the Las Vegas economy by attracting light manufacturing, banking, and other commercial interests. Given annual visitation in excess of 42 million, a major international airport, and one of the largest convention centers in the world, the Las Vegas hotel market is one of the strongest in the United States. According to STR, there are over 170,000 hotel rooms in the greater Las Vegas market, which includes areas southeast of the city of Las Vegas, such as Laughlin and surrounding areas, as well as Kingman, Arizona. The city of Las Vegas offers the majority of lodging facilities in the Las Vegas market, with over 207 hotels and 138,911 current rooms.

Openings of new resorts and attractions have contributed to the evolution of the Las Vegas market and should induce additional demand and visitation as people continue to seek out new and unique experiences found only in Las Vegas. MGM Resorts International and AEG have completed development of the $375-million T-Mobile Arena, located on a 16-acre site behind the New York-New York parking garage. The Park, an eight-acre outdoor destination on the Las Vegas Strip, connects the New York-New York and Monte Carlo with a pedestrian-friendly environment on The Strip’s west side, inclusive of landscaped areas, casual eateries, bars, restaurants, and retail attractions. The outdoor district serves as the gateway from The Strip to the T-Mobile Arena. Currently, various enterprises are making efforts to locate one or more professional sports teams to the market, including a new NHL franchise.

Genting’s 3,500-room Resort World Las Vegas development (the former Echelon project) is moving forward. The property is anticipated to take several years to construct and will likely include multiple phases; the opening of the project is currently slated for 2018. Other planned lodging developments in Las Vegas include the opening of the Residence Inn by Marriott South (124 rooms) in 2016; two boutique gaming properties (500 and 206 rooms) and a 125-room Starwood property, expected to open in 2017; and the Resort World Las Vegas and the 1,100 Alon Las Vegas, along with a Residence Inn by Marriott Henderson (100 rooms) and the SpringHill Suites by Marriott (252 rooms), which are scheduled to open in 2018.

Las Vegas continues to be an iconic worldwide destination and, despite the addition of guestrooms to the market and the proliferation of gaming options throughout the country and world, hotel transactions in the Las Vegas area continue to close. Seventeen hotels sold within the Las Vegas market in 2015, compared to eleven in 2014. The 2,100-room Riviera Hotel & Casino was sold to the Las Vegas Convention & Visitors Authority for $182.5 million on May 4, 2015, making way for an expansion of the Convention Center all the way to The Strip as part of a $2.3-billion transformation of the Las Vegas Global Business District.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Las Vegas United States
Previous Year +7% (7 of 71) +1% (49 of 71)
Growth in 2017 -3% (67 of 71) +2% (36 of 71)
Growth in next 3 years +13% (14 of 71) +10% (36 of 71)

Change In Value For Market:

Las Vegas RevPAR % Change

For more information, please contact:

Shannon Okada
sokada@hvs.com
  • +1 702 280-1405 (w)