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When Nothing Happens In Vegas, Nothing Stays In Vegas
I recently got back from Las Vegas, and wasn’t surprised at all to learn that the city of sin is taking a fiscal beating. US Airways cut half their flights out of town, and as prices at the pump continue to soar, less people are road tripping to the desert city. What’s worse is that, on average, those that do make it to Vegas are spending less money and time actually gambling.
Hotels are doing all they can to attract visitors, but with so many Vegas-goers suffering from the credit crisis, job loss, and other penny-pinching problems, the city is just down on its luck.
Famous casinos, like the Tropicana, have filed for chapter 11, and would-be hotels have halted construction. This is also the first time Vegas has reported a succession of losses since the 9/11 attacks.
Local and online casinos are looking like more attractive alternatives for entertainment junkies and gamblers alike. Still, the notorious city always seems to find a way to survive hard times, so it’s only a question of how, not if, Vegas will stay afloat.
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This “Las Vegas Recession” story has taken on a life of its own… generally by journalists who haven’t followed Las Vegas for more than a few years and think that the recent boom years were the norm.
Not so:
1. Room occupancy is down about only slightly… still in the upper 80% area. That is a rate any other tourism city would kill for.
2. Over the decades, Las Vegas room rates vary depending on consumer demand. It has only been the past few years that they went high and simply stayed high. Before the past few years, a lull in rates wouldn’t have even been talked about.
3. Gaming revenue now makes up less than 50% of all revenue. People are coming less and less for the gaming and more for the shopping, shows, and clubs. If people were spending less, you’d see a rash of clubs shutting down.
4. International visitors are enjoying the weak dollar and coming in droves for long (multi-week) stays. They are taking the place of absent Southern California visitors. International air service to Las Vegas continues to be strong. However, people staying longer stays aren’t going to gamble 24/7. Hence, another reason why gaming wins are down slightly.
5. The Tropicana’s issues (bankruptcy) are related to them losing their Atlantic City gaming license.
I agree. Las Vegas will rebound and be fine. Might not be right away. It could take a few years for new energy policy (drilling, more nuclear plants, more windmills) to ease travel. But the solutions are on their way. And… people will continue to enjoy Las Vegas.
Ted Newkirk
Managing Editor
Access Vegas