omparing this October to the same month last year, most everything has plummeted: the number of visitors, hotel occupancy and the number of conventions. Gaming revenue on the Strip fell 25.8 %. The average daily room rate tumbled 14.3 %, a huge blow to casino profits. At Encore - the Steve Wynn leviathan that opened last week - rooms are starting at us$ 159 in January. When Wynn Las Vegas debuted in 2005, us$ 250 was a bargain.
"You know, the world has changed, and we’ve changed with it," Tom Breitling, senior VP of strategy and development, said during a media tour of one of Encore’s 2,034 plush suites.
Analysts say Las Vegas Boulevard now should bounce back once the credit crisis wanes and tourists feel confident enough to splurge on vacations. But while previous downturns passed as quickly as a thunderstorm, economists expect this squall to linger through 2009, push Clark County’s unemployment rate as high as 10 % and wipe out casino projects.
Tourism is Nevada’s primary breadwinner, and the Strip, with more than us$ 6.8 billion in gaming revenue last year, is the biggest cash machine of all. How its high-end image plays to tourists during and after the recession will affect the entire state.
Las Vegas has thrived on showmanship and glitz — but in decades past, it was purposely affordable. Benny Binion, who launched the World Series of Poker, talked about making "little people feel like big people" to get rich.
The idea of Las Vegas as cheap, if somewhat tacky, carried it through other economic slumps, said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada at Las Vegas. But Wynn changed things. His Mirage resort and casino, which opened in 1989, introduced high-end boutiques and steakhouses to gambling palaces. Bellagio was even more lavish.
The latest Strip projects - including MGM Mirage’s CityCenter, slated to open in 2009 - take their cues from Wynn Las Vegas, a bronze skyscraper with no theme, no sidewalk gimmicks and no expense spared. The us$ 2.3 billion Encore is similarly palatial: Red chandeliers resemble licorice twists, Botero artworks anchor a restaurant, a jewelry store showcases the 231-karat Wynn Diamond and the centerpiece nightclub is named XS.
In 2003, one-tenth of Las Vegas visitors made us$100,000 a year or more. Last year, one-quarter did, according to research for the Las Vegas Convention and Visitors Authority. During the same period, folks making less than us$ 60,000 fell from half of all visitors to 28 %. In recent months, tourists and locals have objected in newspapers and online that the Strip caters to the bourgeoisie.
"If casinos want people back, they need to offer value," said one letter to the Review-Journal. The visitors’ authority has tweaked its marketing to woo the cost-conscious. "Vegas Right Now" aims to fill hotels with discounted rooms, show tickets and spa packages.
In some ways, analysts said, the slowdown might be good for the existing Strip casinos. Months ago, Dennis Forst, an analyst for KeyBanc Capital Markets, thought some jet-setter resorts might have to cut rates or scale back their luxury offerings.
Bill Lerner, a Deutsche Bank analyst, said there were plans in the works to add about 51,000 hotel rooms in Las Vegas, many of them high-end. With several projects on hold because of the recession - Echelon, across from Encore, was halted midconstruction - that number is expected to drop to about 25,000.
"For a while, there was this idea that the Bellagio and the Venetian were going to be mid-tier properties and everything else would go up a notch," said Kathy LaTour, who studies hospitality marketing at the University of Nevada at Las Vegas. "But we’re not going to be Dubai. We’re not going to charge us$ 1,000 a night."
High rollers, she said, were "never going to be 100 % of the market. The fact is, there are other people who come here who’ve been lost in the excess of the last few years."