Fantasy meets economic reality - 7th November
Los Angeles Times)
There seems to be parallel realities
in Vegas right now. On the one hand, for tourists,
things seem almost eerily normal. In fact, better
than normal. Room rates have dropped so low that
you can find stays at Strip resorts cheaper than
budget motels on lonely highways -- with show
tickets, gambling coupons, and/or a food credit
tossed in for good measure.
some shows are closing: "Stomp Out Loud"
announced its demise as a going concern at Planet
Hollywood come January. They hope to find another
theater. And many smaller shows have not weathered
the economic downturn. One show at the V theater
at Planet Hollywood was closed within a week of
opening. But other shows quickly take their place,
and so no showroom remains empty for long.
short, Vegas remains much the same place: full
of conspicuous consumption, parties every night
and carefree fun for all (or those with enough
cash). This weekend, the ticket to have is the
Madonna concerts at MGM. The top ticket price
is a not very budget-conscious -- $375. In short:
There have been a few issues that noticeably affect
the tourists in Vegas.
in the parallel world, the last few months, weeks
and even days have been among the most difficult
that Las Vegas locals have seen for our economy.
Strip revenues and visitor counts have been dropping
for more than eight months. The result is now
coming into full view almost by the day.
lacks a Plan B that posits an area without ever-increasing
growth. We need more people always coming to exist.
Things don't have to drop for Vegas to feel pain.
Here is why: New tourists are needed to fill all
the new resorts opening -- M, Aliante Station,
Encore, City Center (with six towers), Fontainebleau
and even the new tower at Caesars. Meanwhile,
near the Strip are the recently opened Palms Place
and Trump. I am leaving out MGM's Signature and
others. But the point is clear: Even if the number
of tourists simply doesn't rise, everyone in Vegas
knows bad times are ahead.
the big gambling companies to the individual employees
who live off shifts and tips, these are dark days.
All of the major Strip resorts have already done
some layoffs (except Wynn, which has to staff
its new Encore) on account of the economy. In
addition, many workers remaining have seen their
hours cut substantially. Almost every local business
depends on the casinos in some way. Both of our
local newspapers have reported staff cutting at
their competitor's parent company. You know that
is on top of Vegas already being ground zero of
the foreclosure crisis. As Buffet readers know,
I bought my own condominium in February 2007.
The other night I walked through my complex and
counted eight moving vehicles. Of the owners of
the two other units in my building, one has already
moved out of state. A renter has moved into the
unit. The owners told me before they left that
the rent is less than their mortgage but it will
allow them to wait out the economy.
short tour of the agony of the big companies include
MGM-Mirage having issues funding the final phase
of their gigantic City Center and the Las Vegas
Sands (owner of Venetian and Palazzo) admitting
they may default on debt. Meanwhile, the malls
attached to both the Venetian and the Palazzo
are for sale as the parent company teeters with
financial issues. Fontainebleau has not opened
yet but Moody's just downgraded its debt. Harrah's
has just announced quarterly losses. The Tropicana
is in bankruptcy, and I have not even gotten to
the Cosmopolitan, where the developer lost the
project to bankers months ago. So, behind most
smiles in Vegas these days there is a lot of anxiety.
Yet, those with jobs are extra grateful to still
be standing, and with fewer customers to serve,
I've actually noticed an improvement in customer
service in my travels on the Strip. Of course,
eventually tourists are going to notice. The Riviera,
for example, announced it is taking a year off
from the badly needed renovation of the property
to save money.
the one sure thing is that the future guarantees
some amazing deals for tourists (and, with gas
prices down, why are you reading this in California?).
But for locals this is a harrowing economic time,
no matter if you are a big player such as Steve
Wynn about to open a new casino (Encore) or just
a front-line worker hoping to keep working 40
only knows how to grow and we are still growing,
but no one knows if all those rooms will attract
people as has always been true in years past.
As elsewhere, these are interesting times and
even in a fantasy city such as Vegas it turns
out reality exists.
the entertainment, showbiz and news media business,
fantasy can become reality, just as perceptions
can become reality. Fact is also often stranger
than fiction. Vegas has always had ups and downs,
and its no secret where it stands at the moment.
It appears that Steve Wynn and his Las Vegas Sands
have enough backing, support, goodwill and loyalty
to ride out the storm. Trump is now investing
in the Philippines, sharing the risk in a consortium,
and James Packer of Crown is full speed ahead
in Macau, so it seems. One of Charles Darwin's
quotes is applicable in the current environment...
"In the long history of humankind (and animal
kind, too) those who learned to collaborate and
improvise most effectively have prevailed".
It will be interesting to see how much assistance
the state and federal governments may offer, along
with tourism bodies and such, as its all about
tourism, the tourism dollar, and having a positive
image, both to locals and the outside world. You
can bet that the likes of Richard Branson's Virgin
would be interested to fly "whales"
and regular punters out of the casino and gaming
hotspots. Virgin is bringing in more competitive
fares to the Australian market (which you can
bet Crown Casino appreciates), so perhaps they
can drop the prices further in Vegas, and even
cut their own deals with some casinos. Online
casinos have played a dent in the market, but
there's nothing like live entertainment. Quality
usually wins over cheap and nasty, so it will
be interesting to see what acts do the casino
rounds in the coming weeks and months.
Man Australia Profiles
Travel and Tourism