The last downturn in the city of Las Vegas came in the year after the 9/11 attacks. The city rebounded, returning to a more adult-oriented advertising campaign and largely abandoning the kid-friendly PR gimmick of the 90's. What happens in Vegas, stays in Vegas isn't referring to the Circus Circus Adventure Dome or MGM Grand's Lion Habitat. It refers to swanky night clubs, topless cabaret shows and, of course, the ultimate 21-and-over pastime, gambling.
This latest downturn has its roots in the economy. Oil prices have forced airlines to reduce flights across the nation, which perhaps hits the city disproportionately because so much of its business comes from out of the region. The lack of disposable income, exacerbated by the rising cost of food and gasoline prices, have forced some families and individuals to choose between day-to-day essentials and vacations. And those vacations are being planned closer to home to save on transportation costs.
The signs of decline of Sin City are easy to peg. Average occupancy rates of the major hotels in the city are down to 80 percent 4th of July weekend, from typical levels near 95 percent. Gambling revenues, according to some reports, are down 3 percent in June alone. But if you can believe it, the ultimate marker of decline may just the hike in price of the Golden Gate Hotel and Casino's shrimp cocktail. The dish, which has been steady at $.99 since 1991, now costs a whopping $1.99.
Deals for the penny-pincher were used as lures to get you into the casino, where you were supposed to sit down at a blackjack table or a slot machine and lose more than the money you just saved dining. It used to be a $2.99 steak and eggs deal was the norm. Then it was pushed to late night dining, between midnight and the breakfast rush. Then, only midweek. Now, those deals are virtually gone. One company, Boyd Gaming Corp., opted to pull their deals at nine properties rather than raising the price to less than special levels.
The 4 percent rise in food inflation is partly to blame for the scaling down of all-you-can-eat buffets. Strip clubs are taking a hit as the attendance is down nearly 10% this year. Convention attendance, according to the Las Vegas Convention Authority, is down 7 percent this year. And lower tips affect cocktail waitresses and table dealers whose hourly wage tops out typically around $9 per hour. Tips heavily subsidize their take home pay.
And one largely unaccounted for factor is the rise in casino gambling in states across the nation. For as many development delays in building new casinos, in Boston and in Philadelphia, there are thriving casinos in Detroit, northeast Connecticut, and up and down California. The Indiana Gaming Commission adopted new regulations designed to encourage travel companies to bring gaming tourism to its state. And states like Louisiana and New Jersey have had established gaming industries for decades.
In order to draw their customers back, Las Vegas casinos are lowering the cost of hotel rooms and packaging deals for free spa days and free slot play with room reservations. If you can get there, and that part at least is not getting any cheaper, your vacation may just cost you less than it did this time a year ago. In fact, much less. While casinos aren't publicly panicking yet, the downturn will inevitably increase the opportunities for lower hotel rates and bonus deals.
The death of Las Vegas may be forestalled by new developments. The city has transformed itself before and is already in the process of recreating itself. The newest trend in Las Vegas are condo high rises and timeshares. Stand alone residential towers and a couple of mega resort construction projects have transformed the Las Vegas trip into...home. Hotel expansions are being swept aside in favor of condominium towers and all-in-one mini-cities like MGM Mirage's City Center which combine gambling, shopping, dining with boutique hotels and residences so that you may literally never leave.
Will the transformation succeed? It's clear by the sheer number of new residential towers that investors believe this will be the future of Las Vegas. Likewise, it would be hard to argue the current downturn is a harbinger of the city's ruin. This is Vegas, after all, which milks the fantasy of prosperity like no other city. So while the short term forecast may look bleak, it is a sure bet that Las Vegas will rise again.
This latest downturn has its roots in the economy. Oil prices have forced airlines to reduce flights across the nation, which perhaps hits the city disproportionately because so much of its business comes from out of the region. The lack of disposable income, exacerbated by the rising cost of food and gasoline prices, have forced some families and individuals to choose between day-to-day essentials and vacations. And those vacations are being planned closer to home to save on transportation costs.
The signs of decline of Sin City are easy to peg. Average occupancy rates of the major hotels in the city are down to 80 percent 4th of July weekend, from typical levels near 95 percent. Gambling revenues, according to some reports, are down 3 percent in June alone. But if you can believe it, the ultimate marker of decline may just the hike in price of the Golden Gate Hotel and Casino's shrimp cocktail. The dish, which has been steady at $.99 since 1991, now costs a whopping $1.99.
Deals for the penny-pincher were used as lures to get you into the casino, where you were supposed to sit down at a blackjack table or a slot machine and lose more than the money you just saved dining. It used to be a $2.99 steak and eggs deal was the norm. Then it was pushed to late night dining, between midnight and the breakfast rush. Then, only midweek. Now, those deals are virtually gone. One company, Boyd Gaming Corp., opted to pull their deals at nine properties rather than raising the price to less than special levels.
The 4 percent rise in food inflation is partly to blame for the scaling down of all-you-can-eat buffets. Strip clubs are taking a hit as the attendance is down nearly 10% this year. Convention attendance, according to the Las Vegas Convention Authority, is down 7 percent this year. And lower tips affect cocktail waitresses and table dealers whose hourly wage tops out typically around $9 per hour. Tips heavily subsidize their take home pay.
And one largely unaccounted for factor is the rise in casino gambling in states across the nation. For as many development delays in building new casinos, in Boston and in Philadelphia, there are thriving casinos in Detroit, northeast Connecticut, and up and down California. The Indiana Gaming Commission adopted new regulations designed to encourage travel companies to bring gaming tourism to its state. And states like Louisiana and New Jersey have had established gaming industries for decades.
In order to draw their customers back, Las Vegas casinos are lowering the cost of hotel rooms and packaging deals for free spa days and free slot play with room reservations. If you can get there, and that part at least is not getting any cheaper, your vacation may just cost you less than it did this time a year ago. In fact, much less. While casinos aren't publicly panicking yet, the downturn will inevitably increase the opportunities for lower hotel rates and bonus deals.
The death of Las Vegas may be forestalled by new developments. The city has transformed itself before and is already in the process of recreating itself. The newest trend in Las Vegas are condo high rises and timeshares. Stand alone residential towers and a couple of mega resort construction projects have transformed the Las Vegas trip into...home. Hotel expansions are being swept aside in favor of condominium towers and all-in-one mini-cities like MGM Mirage's City Center which combine gambling, shopping, dining with boutique hotels and residences so that you may literally never leave.
Will the transformation succeed? It's clear by the sheer number of new residential towers that investors believe this will be the future of Las Vegas. Likewise, it would be hard to argue the current downturn is a harbinger of the city's ruin. This is Vegas, after all, which milks the fantasy of prosperity like no other city. So while the short term forecast may look bleak, it is a sure bet that Las Vegas will rise again.
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