For years and years, many travelers equated cheap rooms, shrimp cocktails and showgirls with Las Vegas. Hotel rooms under $100 per night were available all up and down the Strip - not just from the Northern cluster of older hotels. As recently as 1999 it wasn't uncommon to be able to book at room at Bellagio for $140/night on weekends.
These days, rates for standard rooms have increased and former mid-level properties have been renovated and re-branded in an attempt to convert them to the higher end. Forget about Strip rates under $100 on weekends and don't be freaked out if your sub-par room at the Luxor costs $249.
What happened? Is this bad for the city? Is Las Vegas still a deal? More after the jump.
Let's start off by taking a look at some of the properties built on the Strip in the last 15 years or so. A handful of these properties were built pretty much exclusively to capture high-end business. I'm talking about Bellagio, The Venetian, Wynn Las Vegas and to a lesser extent, Mandalay Bay and THEHotel. These are high end properties and they don't apologize about. To paraphrase Steve Wynn, 'the top two or three places do all the business' and he's right - the numbers show Bellagio, Wynn and The Venetian grabbing huge amounts of high end play, mostly baccarat.
Ok, so no one is expecting a deal at one of those places (though sometimes you *can* find deals but that's another story). Let's look at a few more properties: MGM Grand, Luxor, and Treasure Island (TI). All three of these were built in the early 90s, as Vegas was going through the whole 'family friendly' vibe that was thankfully replaced by a much more realistic 'adults get wasted, gamble, eat and shop for fun' vibe. Anyway, these properties started out with low rates - very reasonable pretty much year round. Specifically, TI was built basically as a place for people that couldn't quite afford The Mirage next door.
Almost immediately after opening, Luxor began a remodeling process to attract more high-end play. In the past years MGM Grand has replaced all the lower end rooms (in some remarkably creative ways considering what they have to work with in some of those small rooms) with a much nicer product and they built The Mansion, their super-high-end high roller paradise. And of course, Treasure Island is now TI and instead of pirates inside we have a ton of 30 year old Californians trying to prove to each other how much money they have by spending lavishly and making a lot of bad field bets on craps. Of course, as all of these changes were being implemented, room rates were rising along with them. Once a bargain compared to The Mirage, lately I have seen TI higher than The Mirage on a few weekends and that's just insane.
This is just the beginning. Even as these mid-range resorts start charging prices that are sometimes two and three times higher than their averages from a few years back, if you look at the plans announced for the Strip you will notice that the Tropicana and Imperial Palace and maybe even the Flamingo will be gone soon, Circus Circus, the Sahara, and the Riviera probably won't last five or six years and the Stardust will be imploded to be replaced by a high end mixed development as soon as the end of this year. Of course this is on top of other developments such as MGM MIRAGE's Project CityCenter, which recently announced that the main hotel component will be higher end than previously designed. How many rooms in that hotel? A measly 4,000 additional luxury high-end beds.
Never to be outdone, Steve Wynn's Wynn Las Vegas expansion, Encore, will be full of rooms even better than the ones at Wynn. His neighbor Sheldon Adelson's Palazzo is well underway and should help to create one of the largest resort complexes in the world at The Venetian.
The bottom line when it comes to rooms is that in ten years a lot of the more budget joints on the Strip will be gone and we'll have a whole lot of high end rooms to fill. Of course, some currently 'mid-range' properties could lower rates if indeed the market can't support all this new supply. Places like Monte Carlo, Bally's or whatever ends up there, and even a place like Luxor could be forced to lower rates in the event no one is buying at $200+.
Another potential scenario is that the patrons of these older and less expensive Strip resorts end up staying downtown much more often - it could become even more of a feeder for the Strip than it is today. Same goes for properties just off the Strip like the Palms, Hard Rock, Rio, Orleans and whatever goes in the Wild Wild West lot.
So, my fearless readers, what do you think? Is this a 'problem' for Las Vegas? Can Vegas survive if this market segment stops visiting as often? Will economics simply 'take care' of any over-supply issues by lowering prices?
Have rising prices directly impacted how often you visit Las Vegas?
The changes I've described above are just some of the forces that are influencing the Vegas room market. Many would argue that even at higher prices, Las Vegas is still a significant bargain compared to other American cities such as New York or Los Angeles. These same proponents of the massive amount of high end product coming into the market will say that Las Vegas offers a powerful combination of choice - any price point to fit any budget for rooms, food, entertainment, etc and that it is that choice that is the magic of Las Vegas' ability to flourish.
I want to know what you guys think. Please leave your thoughts in the comments.