Hotel room rates for Las Vegas Grand Prix weekend have fallen by nearly 60 percent at some resorts since prices were first posted last fall. But an industry expert says that does not necessarily mean interest in the event is falling short of expectations.
When select Las Vegas resorts in November 2022 opened their booking schedules for race weekend, listed prices were as high as they have been seen in the city’s history. While still at higher than normal rates, a major decrease has occurred.
When a drop in booking pace occurs, it automatically triggers revenue management systems to suggest the lowering of room rates, according to Dr. Mehmet Erdem, professor of hotel operations and technology at UNLV’s William F. Harrah College of Hospitality. While the whole process is data-driven and almost on autopilot, revenue managers ultimately play a role in the lowering of room rates.
The decision-making process regarding hotel room rates for an event that is making its debut is a bit more complicated than an event with an existing history such as New Year’s Eve or the National Finals Rodeo, Erdem said.
“It is not unusual to be overly optimistic about the optimal room rates for such first-time events, especially when comparative predictive analytics data is limited,” Erdem said.
A comparison of room rates (taxes and fees included) tracked by the Las Vegas Review-Journal from the launch on Nov. 2, 2022, to Thursday, of a four-day stay (Nov. 16-19) at four Caesars Entertainment properties show a big difference in price:
* The Linq: Nov. 2, 2022: $2,694.87. Thursday: $1,395.54. A 48 percent price decrease.
* Paris Las Vegas: Nov. 2, 2022: $3,497.60. Thursday: $1,837.66. A 47 percent price decrease.
* Planet Hollywood: Nov. 2, 2022: $4,336.61. Thursday: $1,791.18. A 59 percent price decrease.
* Caesars Palace: Nov. 2, 2022: $5,323.02. Thursday: $3,383.71 A 36 price decrease.
Combined, the four properties saw a price decrease of 48 percent.
The inaugural Las Vegas Grand Prix will take place Nov. 16-18 and is projected to attract 105,000 fans, with several F1-controlled fan grandstands and hospitality spaces planned to be constructed at various points along the 3.8-mile circuit. That track spans portions of Las Vegas Boulevard, Koval Lane and Sands and Harmon avenues.
Tickets to the race aren’t yet sold out, but a scan of the spectator areas for sale on Ticketmaster’s website show that not many tickets remain in available grandstands. Tickets are also noted to still be available in the higher-priced hospitality and suite areas, but those don’t allow seat-by-seat availability viewing like grandstand areas do.
Las Vegas Grand Prix officials say despite the room rate decrease, ticket demand has been and continues to be strong.
“The Las Vegas Grand Prix is energized by the excitement and anticipation that is shared by all as we get closer to November,” a statement from a Las Vegas Grand Prix spokesperson said. “We anticipate a full crowd, and we’re excited to introduce one of the most exciting sporting events in the world to the fans of Formula 1 and beyond.”
Tourism, governmental and race officials have predicted the weekend will have an an economic impact of more than $1 billion. Despite the room rate falling, Erdem said that doesn’t mean that still won’t occur.
“It will be premature to declare that the anticipated economic impact (i.e., that it will be much higher than the Super Bowl) will not be happening due to a drop in room rates,” Erdem said.
The key data point to pay attention to after the race is total spent per guest, or total revenue per available room.
Scott DeAngelo, chief marketing officer for Las Vegas-based Allegiant Air, told the Las Vegas Review-Journal on Wednesday the airline is seeing strong demand for Formula One weekend.
“Let’s remember that gaming revenue in Las Vegas is breaking record after record each quarter,” Erdem said. “But this record-breaking streak is not necessarily mirrored in the hotels’ average daily rate. A person may be spending $200/night for his/her hotel stay, but spending four times as much per day when you factor in gaming dollars, dining, beverages, entertainment.”