Las Vegas was once the world’s most popular gambling destination, but now every penny is vital to keeping the resort profitable.
There was a time when mentioning the name “Las Vegas” made you think of glitz, glamour, casinos games, free drinks and 5-dollar buffets.
But things have changed, and growing competition from new American poker rooms opened across the country has caused profits to hit a wall. The number of foreign visitors – especially high-rollers – has also dropped, as Asian gamblers now prefer Macau, Australia or other Asian countries like Singapore.
While gambling still makes up the larger part of the city’s revenue, nightclubs and pool parties are slowly taking over as the hottest profit generators.
Nightclubs bringing in millions
Nightclub revenue of Las Vegas casinos:
• Wynn Las Vegas – up to $170 million
• MGM Resorts – $115 million
• Cosmopolitan – up to $90 million
People don’t just go to Vegas to try their luck; they also go there for some of the wildest parties. Whenever there’s a cool get-together, customers are willing to pay as much as $50 – sometimes even more – just to enter the door. Then they spend thousands of dollars more on drinks and food.
Night clubs have always been big business in Las Vegas, but it’s interesting to see just how important they are to the resort’s success. The Nightclub and Bar Media Group said seven of the country’s top 10 most profitable bars and nightclubs are located in Las Vegas.
In addition to its highly profitable gambling business, Wynn Resorts is also in the centre of Sin City’s nightlife. The casino’s flagship property on the Las Vegas Strip holds three of the most popular and successful clubs in the US.
It is estimated that the XS Nightclub has generated between $90 million and $95 million in revenue over the past year. Its sister clubs Surrender and Tryst have made $45 to $50 million and $20 to $25 million in profits respectively. As it usually happened, this kind of popularity only draws more business.
Casinos fall, nightlife takes over
Taking advantage of the growing popularity of nightclubs in Las Vegas, the Hakkasan Group has invested over $100 million in building its new Hakkasan restaurant and nightclub.
The project was completed through a partnership with MGM Grand and it looks like it totally paid off, because recent gambling news reports profits for this financial year are already approaching the $100 million landmark. Hakkasan operates another club in MGM Grand, called Wet Republic, which is also a highly successful business, drawing more and more party-goers to the southern part of The Strip.
Nightclubs and bars have become a significant part of any major Las Vegas resort’s business. In 2013, they accounted for up to 10.8% of Wynn’s profits, 11.1% of MGM’s revenue and 13 to 13.8% of the Cosmopolitan’s total income.
The most profitable resorts in Las Vegas have also become home to the most successful nightclubs; they throw the most popular parties, gathering a record number of visitors with every major event.
Tourists spend huge amounts of money at nightclubs, often paying thousands of dollars on bottles of the most expensive champagne. Meanwhile, club owners spend even more on top-tier DJs.
Rumor has it Hakkasan spent $65 million on big names such as deadmau5, Tiesto, Steve Aoki, and Calvin Harris when it opened. It is said that deadmau5 alone was paid $425,000 per show, while Tiesto settled for $250,000.
Betting on entertainment
Casino games continue to make up an important part of the gambling industry in Las Vegas, but bars, restaurants and nightclubs account for a surprisingly large part of total profits. As an important source of revenue for mega-resorts, the entertainment industry is starting to get more attention.
While gambling revenues have not seen any big jumps lately, nightclubs and restaurants are becoming Sin City’s safest bet. Meanwhile, American gambling laws continue to encourage a nationwide casino expansion, causing the market to become oversaturated.
Several casinos have been forced to shut down this year, under the pressure of a growing competition, which is why maybe it’s time for America to rethink its development strategy and rely more on entertainment, not just gambling.