In recent years, Las Vegas has ramped up its offerings beyond the traditional casino experience. Events at venues like the Sphere, home to high-profile concerts, along with Raiders games at Allegiant Stadium and thrilling Formula One races, now form a significant part of the city’s allure. This burgeoning entertainment scene offers numerous attractions for visitors and subsequently provides more spending opportunities, thereby benefiting the local workforce. However, a critical question arises regarding whether this evolution in entertainment helps diversify Las Vegas’ tourism-heavy economy.
Experts tracking the local economy offer mixed insights on the matter. While the surge in entertainment jobs shares common ground with the existing leisure and hospitality sector, some argue that it enhances the region’s main industry, capturing more sustained demand. For instance, visitors may travel to Vegas for a once-in-a-lifetime concert experience, invigorating the local economy.
Conversely, David Schmidt, chief economist with the Nevada Department of Employment, Training and Rehabilitation, acknowledges that entertainment spending is often discretionary. Such expenditures can easily be cut during tougher economic times, putting the overall resilience of the economy into question.
As tourism declines, this concern becomes increasingly pertinent. The Las Vegas Convention and Visitors Authority reported about 22.6 million visitors from January to July of this year, an 8 percent drop from the previous year, indicating the city is feeling the repercussions of a tourism slump. Consequently, Las Vegas has reportedly lost 4,300 jobs in the past month, accompanied by a dip in consumer spending within key sectors.
John Restrepo, founder of RCG Economics, recognizes the longstanding connection between entertainment and the essence of Las Vegas. However, he asserts that this enhancement does little to fortify the overall economy against downturns. According to Restrepo, the distinctive volatility of Las Vegas necessitates a shift away from an over-reliance on discretionary spending to stabilize the economy.
The entertainment workforce in Southern Nevada has grown significantly over the last decade, yet the region’s dependence on tourism remains starkly pronounced compared to the national average. As of July, approximately 34,500 individuals worked in arts, entertainment, and recreation within the Las Vegas area, making up 11.2 percent of the leisure and hospitality workforce. A decade prior, this figure was just 19,700, or 6.9 percent of the sector.
In entirety, the leisure and hospitality industry makes up about 27 percent of Southern Nevada’s workforce, compared to 11 percent nationally, elucidating the prevailing reliance on tourism.
Andrew Woods, director of UNLV’s Center for Business and Economic Research, observes that while enhancements in entertainment do strengthen the tourism sector, they do not diversify the economy in a meaningful way.
Woods argues that true economic diversification would involve the development of industry sectors that can function independently. This would prevent one industry’s downturn from impacting another, thereby fostering greater stability.
In contrast, Jeremy Aguero of Applied Analysis asserts that the growth of professional sports and entertainment does lend a degree of diversification to the economy. Aguero points to entities like UFC, which operates a video production studio and a training facility in Las Vegas, showcasing how individual organizations contribute to local economic resilience.
He believes this evolution makes Las Vegas better equipped to weather economic fluctuations, citing it as a tremendous driver of the region’s economy. Nevertheless, Aguero cautions against viewing this diversification as a safeguard against potential economic recessions, stating that no sector can be deemed recession-proof.
Before the pandemic, Las Vegas enjoyed a healthy economy, with unemployment dipping to around 4 percent after recovering from the Great Recession. However, the onset of COVID-19 quickly transformed the bustling Strip into a ghost town as tourism plummeted, leading to unprecedented job losses. During April 2020, the unemployment rate in Las Vegas skyrocketed to 34 percent, whereas the national average was 14.8 percent.
As of July, Las Vegas’ unemployment rate stands at 5.6 percent, slightly above the national average of 4.2 percent. Former Las Vegas City Manager Betsy Fretwell believes that tourism is resilient and highlights the city’s array of entertainment options, which many other cities would envy.
However, she cautions that local stakeholders should not view entertainment expansion as a panacea for economic stability. Fretwell acknowledges that while some progress has been made towards economic diversification, Southern Nevada still lags behind its peers.
In the aftermath of the Great Recession, several industries such as tourism, healthcare, and logistics have expanded, but the state’s economy continues to be less diversified compared to other Mountain West metro areas. Much of the job growth has been concentrated in low-skill and low-productivity positions, limiting upward mobility for workers in the region.
Steve Hill, president and CEO of the Las Vegas Convention and Visitors Authority, recognizes that while sports and entertainment may not diversify the economy to the extent that sectors like manufacturing would, they provide a stable foundation for tourism. Hill points out that the impending move of the Oakland Athletics to Las Vegas will create jobs tied to baseball games, regardless of tourist footfall.
Sporting events, along with boxing matches and concerts, often attract tourists, further supporting the local economy. A report from UNLV’s business research center earlier this year highlighted that sporting events generated over $1.8 billion in direct output from out-of-town visitors within a year.
With events like the annual Las Vegas Grand Prix on the horizon and the Super Bowl set for early 2024, Hill emphasizes the value of the entertainment sector in maintaining visitor numbers. According to him, these events greatly assist the city’s economic recovery and amplify the regional brand.
Hill states that the evolving entertainment landscape is reshaping Las Vegas’ identity, making it known not only for gambling but also for premier sports and concert events.
Despite the excitement surrounding these developments, public funding has played a substantial role in the construction of major entertainment venues. In 2016, the Nevada Legislature allocated $750 million in public funds for Allegiant Stadium, which serves as the home for the Las Vegas Raiders. Further funding totaling $380 million was approved in 2023 for the Athletics’ new baseball stadium, set to open in 2028.
Critics like the Nevada State Education Association have voiced opposition to such funding initiatives, arguing that taxpayer money should instead support urgent educational needs, particularly in a state with a history of underperforming educational outcomes.
This ongoing debate points to a larger conversation regarding the prioritization of entertainment projects over pressing social needs.
Overall, while Las Vegas’ expanding entertainment landscape enhances the tourism experience and presents an array of attractions for visitors, the question of economic diversification remains complex and multifaceted.
As the city strides towards a more robust entertainment-driven identity, balancing this development with sustainable economic practices will prove crucial in navigating future economic challenges.
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