Security Markets

In general terms, this industry has radically declined during the 2009, but slightly inclined after the global crisis.

One of the global reasons is a drop in overseas visitor arrivals. In 2009, a drop in overseas visitor arrivals exacerbated weak demand for rooms by US residents. Despite the weak dollar, overseas visitors to the United States fell 6% in 2009 to 23.8 million from 25.3 million in 2008, according to the US Department of Commerce’s Office of Travel and Tourism Industries. The United Nations World Tourism Organization (UNWTO) estimates that direct expenditures by all foreign visitors to the US (a category that includes spending on more than lodging and gaming) decreased 23% in 2009.

The other is local reason. On the consumer side, unemployment remains high and demand is bifurcated. High-income earners have continued to spend, but lower-income earners remain stretched and focused on bare necessities. Thus lower discretionary income, tight credit conditions, and a poor employment outlook leaded the declining of this industry growth rate. In 2010, Las Vegas Strip gross gaming revenue grew up to 4.5%. After the global crisis visitors from other countries and cities were increasing. However, this result was high volatility, with declines reported in most of the other months.

On the other hands, Atlantic City’s troubles increased last 3 years. Revenue of the gaming decreased 13.2% in 2009, 7.6% in 2008 and 5.7% in 2007. Also during 2010, Standard & Poor’s says this industry increased the competition from neighboring states. Unsurprisingly, 11 casinos were up for sale and Hilton Casino and Resort defaulted in 2009.

In these reasons, it is important to choose the stock compared with the location of the hotel and gaming facilities. Thus, analysts recommended more of the companies which were located in Las Vegas rather than were leading hotels.