🚨Las Vegas hotels are cutting resort fees and slashing rates after 2025 visitation fell 8% YTD, with July down 12% YoY [Source: Review-Journal]. Occupancy averaged just 76.1% through July, down from ~83.7% last year, while ADR slipped to $155 (–3.4% YoY). RevPAR fell 8.5% YoY, pressuring margins even as gaming revenue held slightly positive. For CRE, this correction resets baselines for underwriting: investors must factor lower NOI, higher cap rates, and wider debt spreads until visitation stabilizes.
Hotel occupancy: 76.1% YTD 2025 (–7.6 pp YoY)
ADR: $155 YTD 2025 (–3.4% YoY)
RevPAR: –8.5% YoY through July 2025
Convention attendance: 3.5M YTD (+2.1% YoY)
Loan Performance. NOI under pressure as waived resort fees (5–8% of room revenue) erode margins. DSCR must be stress-tested with RevPAR down 8–10%.
Demand Dynamics. Leisure traffic down sharply; conventions show resilience. Midweek softness persists; event weekends are the exception.
Asset Strategies. Bundle value-add perks (parking, F&B credits) instead of pure rate cuts; focus on repeat guests and convention anchors.
Capital Markets. Lenders price volatility: spreads widened, leverage capped at 55–60% LTV with cash sweep triggers below 1.5x DSCR.
Vegas downcycle: demand reset, ADR slip.
Conventions resilient; leisure travel weaker.
Financing tight: lower leverage, higher spreads.
Underwrite with elevated expense ratios and 9–10% cap rates.
🛠 Operator’s Lens
Refi. Expect conservative leverage, higher reserves; negotiate flexibility on covenants.
Value-Add. Use discounted rooms to drive gaming/F&B spend.
Development. Delay major projects until stability; model cash traps.
Lender POV. Conservative stance; select CMBS appetite, private debt at 7–8%+ rates.
Fall conventions and F1 may lift Q4 performance, but underwriting should exclude one-off events. Sustained recovery hinges on 2026 convention demand and macro stability. Risk: if discounts fail to restore value perception, cap rates may reprice higher.
Las Vegas Review-Journal — “Las Vegas hotels cut rates, waive fees as tourism slows” (Sept 2025). AZFamily — “Vegas hotels slash room rates in Fabulous 5-Day Sale” (Aug 2025). 963 KKLZ — “Resorts World drops resort fees for summer” (Aug 2025).
