Las Vegas Sun

March 28, 2024

New reports underscore massive economic impact of tourism tax dollars in Nevada

Tourism

Steve Marcus

Pedestrian and vehicular traffic fill the Las Vegas Strip, looking south from Flamingo Road, on March 24. Nevada’s tourism industry supported 386,200 total jobs — or 27% of the state’s total employees — making $21.4 billion in total wage and salary payments in 2022, according to a new report from the Nevada Resort Association.

A new report from the Nevada Resort Association shows the state’s tourism industry generated $90.7 billion in total economic impact — or 43% of the state’s total gross domestic product — in 2022.

The Las Vegas-based organization last week released its 2023 Nevada Gaming Fact Book, which shows that the tourism segment paid more in industry-specific taxes and fees than any other industry in Nevada, for a total of $2.1 billion.

Ultimately, the tourism industry generated 35%, or about $1.9 billion, of the state’s general fund tax revenues, said Virginia Valentine, Nevada Resort Association president and CEO.

“It surprises people what a big share of the state general fund comes from tourism,” Valentine said, noting the significance of industry-specific taxes in a state with no income tax.

Employment and revenue — including $14.6 billion in gaming revenues in fiscal 2022 — have made significant gains in the aftermath of COVID-19, Valentine said, even if they still fall short of pre-pandemic levels.

The tourism industry supported 386,200 total jobs — or 27% of the state’s total employees — making $21.4 billion in total wage and salary payments in 2022, according to the report.

The number of employees who work directly in gaming has a direct impact on the rest of the economy, Valentine said.

“Because they’re going to go back to their neighborhoods, and they’re going to be engaging in retail activity locally, and restaurants and their own entertainment,” she said. “So, I think it ripples through the economy because you have such a powerful economic generator and in the tourism industry.”

Kevin Bagger, vice president of the Las Vegas Convention and Visitors Authority (LVCVA) Research Center, emphasized that visitation and spending at the resorts also percolated through the local economy as hotel and gaming operators contract with food and beverage suppliers, linen companies and other vendors.

According to a report that the LVCVA and Applied Analysis released this month — “Economic Impact of Southern Nevada’s Tourism Industry” — total economic output related to visitor spending reached a record $79.3 billion in 2022, or nearly half of the global gross domestic product of the area.

“Some people get numb to that and don’t truly appreciate how truly important it is to our local economy that we have this constant hum of tourism activity that’s happening; that just keeps our economy moving forward and supporting all the various related industries,” Bagger said. “And the report just highlights how strong that has been since we’ve been emerging from the pandemic.”

The economic impact report also showed record visitor spending in 2022 of nearly $45 billion, and an all-time high of per-visitor spending of $1,156. Bagger attributed robust spending to pent-up savings and demand because of COVID-19 shutdowns, stimulus checks and more.

Brian Gordon, principal with Las Vegas-based Applied Analysis, noted that the record spending in 2022 — up almost 22% from before the pandemic in 2019 — took place despite visitor volumes still being down from pre-pandemic levels. Las Vegas welcomed 39 million visitors in 2022, down from 42 million in 2019 before the outset of the pandemic shuttered properties for 89 days in early 2020, according to the LVCVA report.

Gordon cited higher room rates, gaming, food, retail and entertainment as contributors to increased spending.

“The recovery of the convention industry as well — that’s a key component of the overall tourism industry and helps to stabilize midweek hotel demand,” Gordon said. “That sector within the leisure and hospitality industry is also experiencing robust recovery and plays an important role in the tourism industry as a whole.”

To understand the economic impact of visitation, Bagger said, it’s also important to understand who is visiting. He pointed to the LVCVA’s most recent “Las Vegas Visitor Profile Study,” which showed visitors trending younger due to the emergence of Generation Z and the number of older people choosing not to travel because of COVID-19.

Younger visitors are more likely to travel in large parties and are typically more diverse — both data points that were reflected in the visitor profile, Bagger said.

As the demographics of consumers coming to Las Vegas slant toward a younger generation, Gordon added, there’s increased interest in and spending on special events in addition to concerts and sports.

“The entertainment offerings coming out of COVID-19 helped propel the economy forward at a time when it was facing challenges,” he said. “And that momentum has carried the market through into 2023.”

According to the visitor profile, 77% of visitors to Las Vegas in 2022 showed strong satisfaction with their trip.

More than 90% of respondents in the study said their trip met or exceeded their expectations, Bagger said, and close to 9 of 10 respondents said they would recommend Las Vegas to others.

“Ultimately, it is a function of the hospitality industry and employees who interact with visitors on a daily basis that influences people’s desire to come back,” Bagger said. “ That sounds like almost a given, but you can take that for granted if you’re not careful. That truly is an influence on our visitors, that they are having a very positive experience when they come to Las Vegas.”

The future looks bright for Nevada, Valentine said.

According to the fact book, she said, the state’s tourism industry boasts $23 billion in current or planned major capital investment projects.

“You can see that there is some momentum for some continued growth,” Valentine said. “I think also these new events, (Formula One) and the Super Bowl, are going to be just huge events. And if those events are successful, and they attract more events — I think there’s just a lot of really good news in there about the future for us.”