Skip to content
Link copied to clipboard

Vegas on losing end of rough economy

LAS VEGAS - After he scored a room at the Excalibur online for $24 a night, Mario Ellis hopped in his car and headed for Sin City.

The Vegas Strip still beckons millions, but not as many as a year ago, and those who arrive spend less than before.Casino floors are half-empty during the day. Cabbies complain of longer waits. Airlines are cutting flights to the city.
The Vegas Strip still beckons millions, but not as many as a year ago, and those who arrive spend less than before.Casino floors are half-empty during the day. Cabbies complain of longer waits. Airlines are cutting flights to the city.Read moreELLEN CREAGER / Detroit Free Press

LAS VEGAS - After he scored a room at the Excalibur online for $24 a night, Mario Ellis hopped in his car and headed for Sin City.

"I had to jump on it," said Ellis, 42, a UPS driver from Los Angeles, a key drive-in market for Vegas. He had his hours and overtime cut this year, so he's on a budget.

He hasn't eaten in any fancy restaurants since he arrived Sunday. He hasn't gone to any shows or shopped. And instead of the $2,000 to $3,000 he's had to gamble with in previous years, Ellis hoped to spread $600 over his four-night stay. Slots and sports betting only, no expensive table games.

It's that potent one-two punch that has had Las Vegas and Atlantic City reeling all year long: the bad economy and slashed discretionary spending.

But the desert gambling mecca, with more than 150,000 hotel rooms (easily overshadowing Atlantic City's 17,107) and heavily dependent on convention business, is having the tougher time.

Fewer people are visiting, let alone spending. Casino floors are half-empty during the day. As Ellis played the slots at the Paris Casino this week, he was surrounded by rows of lonely machines.

Taxi drivers up and down the Strip complain that they wait a long time between pickups. The fares they do get negotiate every rate and no longer tip even minimally.

Even fewer flights are landing here - US Airways Group Inc. announced last month that it was cutting arrivals in half - so Vegas hotels are heavily discounting to lure folks back.

At the Imperial Palace, rooms are going for $25, $65 on Saturdays. At the Palms Casino Resort, a standard room costs $59, $99 for a studio suite.

High-end casinos such as Mandalay Bay are offering rooms for $109.99 this week, with a special two-night-minimum promotion that includes a 50 percent discount on a suite upgrade, a two-for-one House of Blues restaurant voucher, $25 resort credits on food, beverage, or merchandise, and 30 percent off tickets for The Lion King.

Not a good omen for other casino towns - or tourist destinations in general.

"What happens in Vegas doesn't stay in Vegas. What happens in Vegas spreads out to all the rest of us," said Meryl Levitz, president and chief executive officer of the Greater Philadelphia Tourism Marketing Corp.

"When Las Vegas greatly lowers its rates, consumers don't think of it as Vegas being Vegas. They think along the lines, 'Well then, I should be able to get a good deal anywhere.' "

In September, for the first time since May 2008, the number of visitors to Las Vegas went up year over year - 4.3 percent. But the average daily room rate was down nearly 25 percent, to just over $92 a night. Gambling revenue was down 3.6 percent, the 21st straight monthly decline, according to figures released last week by the city's convention authority.

All the big casino companies are feeling the pinch. Las Vegas Sands Corp., which owns the Venetian and the Palazzo on the Strip, as well as the Sands Bethlehem Casino in Pennsylvania, reported a $123 million net loss for the third quarter that ended Sept 30. MGM Mirage, which owns 10 casinos, the most on the Strip, posted a $750.4 million net loss. And Harrah's Entertainment Inc., which owns eight casinos here, had more than a $1 billion net loss.

Conventions and meetings, which drive midweek room occupancy, are way off this year. Attendance is down 27.1 percent compared with the same period in 2008; the number of gatherings is down 18.2 percent.

About 400 meetings were canceled from late 2008 to May, resulting in $166 million lost in nongaming revenue, the Las Vegas Convention and Visitors Authority says.

One reason: restrictions on using federal-bailout funds for certain types of corporate travel, said Rossi Ralenkotter, the authority's president and CEO. The other: Las Vegas' reputation as a lavish meeting destination.

The town's party-hearty image had to be tweaked, said Billy Vassiliadis, chief executive of R&R Partners Inc., the Las Vegas public relations firm that created the "What happens here, stays here" slogan. Its current campaign features high-level executives hard at work in Vegas.

"We began delivering a much more sober business message and didn't talk much about the play side," Vassiliadis said yesterday. "We were dealing with the perception of whether it would be frivolous to hold a meeting in Vegas. Clearly, after the first quarter of the year, executives needed validation and support to come here for a meeting."

During a panel discussion yesterday during the annual Global Gaming Expo, also known as G2E, Ralenkotter said: "Las Vegas [has] worked hard to ensure that the value of face-to-face meetings was better understood. We have also worked hard to attract new business to Las Vegas and have signed 24 new contracts with [trade] shows that have either never been . . . or have not been here in more than five years."

G2E itself, which began Tuesday and concludes today, seemed to mirror its host town: more subdued, less boisterous.

It drew an estimated 25,000 gambling executives, regulators, slot manufacturers, and suppliers to discuss industry trends and showcase the latest products - down from 26,500 last year. Registered exhibitors numbered 566, down from 724, and the amount of exhibit space used at the cavernous Las Vegas Convention Center was 258,600 square feet, down from 335,480 in 2008.

With the supply of convention visitors dwindling, luring back the leisure traveler became a priority, Jacob Oberman, a casino consultant with Los Angeles-based commercial real estate firm CB Richard Ellis Group Inc., said at a panel Tuesday on filling hotel rooms in a down economy.

"They're doing this by either giving gaming customers more favorable complimentaries than in the past, increasing their allotment of rooms, and presence with Internet wholesalers such as Expedia, [or] offering creative discount room offers and packages to the general public.

"All in all," Oberman said, "the leisure customer that they are filling rooms with is a lower-spending customer than the convention-meeting groups of the past."

Las Vegas Sands spokesman Ron Reese echoed the sentiment, noting that for the first time in a long time, a suite at the company's Venetian and Palazzo hotels goes for under $200 midweek. "We've had nearly a 90 percent occupancy for the two buildings in the last quarter. But the spend-per-visitor without a doubt is down."

Schaum Jaganath, 48, who flew in from San Francisco on Monday for a two-night stay, said he could no longer afford to play blackjack at the Bellagio. Instead, he is hitting less-ritzy casinos and has cut his gambling budget more than half, to $300 from $1,000 a year ago.

"It's because of the economy," Jaganath, who imports fabrics from Europe, said as he played blackjack at the Paris Casino Resort, where he got a room for $79 a night.

"I'm just tightening my belt. . . . We're allowed to party, but not too much now."