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US casino hotels industry to continue to grow in 2012
The US casino hotels industry began its recovery in 2010 and 2011, after a disastrous 2008 and 2009 when revenue declined 8.7% and 8.4%, respectively, as the economy tanked and people spent less money on gambling, reported the online agency PR Web.
With the economy improving over the course of 2010 and 2011, consumer spending increasing (growing 2.0% in 2010 and 2.3% in 2011) and fears about the economy subsiding, consumers visited casinos more often. According to the latest report of IBISWorld, cited by PR Web, this trend is expected to continue in 2012, with consumer spending forecast to grow 2.0%.
Declining domestic travel and international arrivals into the United States have also affected the industry. Both fell in 2009, but have grown some since and are expected to grow more in 2012, further fueling demand for hotel casinos.
The economic downturn also resulted in consolidation in the casino hotels industry. A number of major mergers have occurred over the last five years: Harrah’s Entertainment Inc. merged with Caesars Entertainment Corporation while MGM Resorts International merged with Mandalay Bay Resort and Casino. The domestic industry has also faced significant competition from international casinos, Samadi notes. In 2007, Macau, China, overtook Las Vegas as the world’s largest casino gambling region. Despite the recent decline in revenue, the industry has experienced some positive developments over the five years to 2012 with gambling becoming a more accepted part of the US culture.
This industry has a low to medium level of concentration. The mergers of Caesars with Harrahs and MGM with Mandalay Bay secured these operators as dominant players in this industry. Las Vegas Sands Corporation is the third major player in this industry. While the level of industry concentration has increased significantly to 2007, it is now expected to not increase any further due to regulatory constraints relating specifically to this industry by state governments and to overall industry competition levels monitored by agencies of the federal government. Given the nature and operations of this industry, it is not surprising that it mainly comprises large employers. The level of industry concentration increased significantly since 2007 due to consolidation, but it is not expected to significantly rise again over the next five years, as predicted in the IBISWorld report.
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