Photo: Las Vegas Convention and Visitor Authority.

When The Mirage resort opened in Las Vegas 1989, it was the start of an era of rapid expansion. What followed in next two decades was incredible growth for companies like Wynn Resorts (WYNN -0.26%), Caesar's Entertainment (CZR), and MGM Resorts (MGM -1.77%) which now owns the Mirage. Sin City seemed unstoppable.

That is, until the financial crisis of 2008 hit and left few Americans spending the way they had in the past, especially for leisure travel like trips to Las Vegas. Six years after those fateful months in 2008, gaming revenue in Las Vegas is just now getting close to reaching those 2007 peaks. But will this recovery last?

The Vegas Recovery
Taking into account just the Las Vegas strip and downtown, Las Vegas made the most gaming revenue it had ever made in 2007 at nearly $7.5 billion. But in 2008, revenues dropped 11% year over year. In 2009 revenues dropped another 10%. Since then, annual gaming revenues have grown slightly each year, and 2014 estimated gross gaming revenues are close to $7.3 billion, just below those 2007 peaks. The chart below lays out the past 10 years of gross gaming revenues for Las Vegas.

 
Year

Las Vegas GGR ($US)
(Strip + Downtown)
2004 5,996,791
2005 6,687,747
2006 7,319,307
2007 7,460,816
2008 6,708,983
2009 6,074,019
2010 6,269,962
2011 6,565,637
2012 6,716,374
2013 7,005,649
2014 Est. 7,236,327

Data: UNLV Center for Gaming Research

These growing revenues have helped companies like MGM and Wynn to finally start reporting rising revenues and profits for their U.S. operations again. However, not all companies are recovering in this Vegas comeback. Caesar's Entertainment has had a terrible time trying to turn a profit in the U.S., and so far this year has reported steep income decreases, with a 50% decrease in income in Q1 year over year, and another 20% drop in Q2.

Without the ability to stop the bleeding in the U.S., much less turn a profit, and no international holdings to diversify revenues, Caesars is not a company that is feeling the benefits of a recovering Las Vegas. And if the Vegas recovery can't last, Caesars is probably going to have a hard time even staying afloat considering its massive debt load.

More than just gambling
The Vegas recovery is helping most companies there to start growing U.S. revenues again, especially when it comes to non-gaming operations like hotels. In 2013, Las Vegas drew in nearly 40 million visitors. Visitation rates for 2014 are on track to be nearly 4% higher than last year, and the rise in visitors is helping to increase hotel room revenue, convention usage, and other non-gaming revenue.

There are more hotel rooms in Las Vegas than ever before, a number that has risen steadily since 1970. Revenue per available room, or RevPAR, has risen steadily in Vegas for both Wynn and MGM. In the most recent quarterly earnings, Wynn Resorts reported a 7.2% increase in Las Vegas RevPAR which helped the company to report a 25% increase in Las Vegas property EBITDA year over year. MGM also benefited from increasing hotel revenue reporting a 6% increase in Las Vegas RevPAR, year over year.

Aside from hotel revenues, convention space revenues have also been a highlight of the Las Vegas comeback. Since the city began marketing itself more aggressively as a business meeting destination, the city has continued to grow this segment in the last few years. The Las Vegas Convention and Visitors Authority reports that the total economic impact of conventions and business meetings in Las Vegas in 2013 was $7.4 billion.

But can the Vegas recovery last? These companies think so
One thing is for sure, the companies themselves are betting on a Vegas comeback. While gaming revenues are still yet to reach their 2007 peaks, that isn't stopping gaming companies from pumping millions into Sin City to start developing there again. All combined, the development pipeline in Las Vegas from 2014 to 2016 is worth over $7.8 billion. This includes new casino resorts, a major jump in the number of hotel rooms available to more than 156,000 rooms, and an additional 500,000 sq. ft. of convention space.

Rendered view of what Resorts World Las Vegas is expected to look like. Source: Genting.

One of the biggest and most important of these developments doesn't come from one of the big U.S. gaming companies, but instead from Malaysian operator Genting, owner of Resorts World casinos around the world. The company is now building its $4 billion Resorts World Las Vegas, set to open in 2015. This Asian-themed resort will include 3,000 table positions across 100,000 square feet of gaming space, three hotel towers, a convention center, one of the highest observation decks in the city, a giant exotic aquarium, a terra-cotta warrior exhibit, a scaled-down Great Wall replica, live pandas, and possibly even a theme park.

There could be another market correction or recession that could cause a dip in Vegas revenues again, but with the track record Las Vegas has had over the last 25 years, and the way the city has been able to recover since 2008 with an even more well-rounded economy including increased non-gaming revenue, Sin City still looks to be a good long term bet (for companies other than Caesar's Entertainment, that is).