A Las Vegas-is-gonna-go-bust doom and gloom article from the Times Online in the UK.
Categories: Business of Gaming, CityCenter, Las Vegas Strip, MGM Resorts International
Tags: citycenter, lasvegas, times, vegas
OMG, what a joke. Miss informed people really get me going. They must not realize about half of city center will be paid for in full by condo sales, half of which are already sold, and the place is still almost 2 years from opening. We have seen no major signs of falling occupancy rates, which would be required to have less crowded tables and places to eat. I think there is a ton of assumption in this article. No question, the credit situation will effect future projects for a while until things get a bit better. But the economy hasn't come to a scretching halt, we're just in a slow down. With all the rate cuts, a stimulas package, and the new president coming in, I think this will be short lived.
Brian: "the economy hasn't come to a scretching halt, we're just in a slow down."
Yeah, the halt is to come later.
"ten million square foot casino"?
The story goes downhill from there.
That's some awful journalism. I would be willing to bet that the conversation with the cabbie in the lede was a complete invention, or it just so happened that he got a cab driver who'd just finishing browsing the City Center site. What planet does Ayres live on where people talk like this?:
"They say it's gonna cost more than $8 billion: the most expensive private land development in American history. "
That's just ridiculous, and I'm amazed that an editor would actually run something like this. One quote from an un-named cab-driver, some talk about Lefty Rosenthal (who was never exactly typical of casino operators, and who was in fact barred from gaming in 1981 or so), and some totally subjective reporting about the city being less crowded. I've spent the last two days doing convention speaking at two different casino-hotels, and I didn't see any slowdown.
And then the characterization of Kirk Kerkorian as a "corporate raider." I know that he does his share of hostile taking-over, but I'd like to think that a man who's been building casinos in Las Vegas since 1967 can be better described.
I've wrote an article in the April issue of Casino Enterprise Management about just this issue--economic slowdown and Vegas--and my research seems to say that while there is an impact, it's not as severe as many would have it. The best comparative period is 1978-1982, and while there was some decline, the numbers quickly continued climbing upward. And remember, this was during a period of gasoline rationing (not just higher prices), double-digit unemployment (compared to 5% or so today), and much higher inflation.
Las Vegas hotels are different from other businesses because they've got far more elastic prices, and they can adjust room rates to stimulate visitation. So, worse comes to worse, the room rates decline for a while (which only hurts the condo-hotel owners), occupancy stays above 90% for the year, and when things pick up the room rates go back up.
Great Depression II? Does Ayres know what the Great Depression was? Unemployment at 25% (five times the current rate), banks failing left and right, and a general industrial slowdown. Only an alarmist--or an incredibly naive tyro--would would break out GD2 talk at this stage.
Absent a major terrorist event, massive disruptions in long-distance travel, or some other catastrophe, Las Vegas isn't going anywhere.
Dave, it is awful journalism. It seems to be par for the course for Ayres. On the Times of London link Hunter provided to the story, there are links to other Ayres' stories on Vegas. The one he wrote when the monorail opened in 2004 included this sentence:
"Until this week, Las Vegas, with its casino mobsters, Elvis impersonators, cab-driving pimps and grotesquely overweight midwestern tourists, was hardly a city known for its public transport."
He's not exactly the most understated writer, but as LA correspondent for the Times of London, he must be doing what they want, writing flippant, fluff pieces.
Regarding Kirk Kerkorian, outside of Vegas and probably California, he is known as a "corporate raider" by many people. That description was used liberally by the Detroit media when he went after Chrysler in 1995.
I'll have to wait a month to read your story in Casino Enterprise Management. When the May issue comes out, archived articles will be available to non-subscribers.
Thanks for your insights on Las Vegas.
That article is frustrating because there are so many different markets that are drawn to Las Vegas. My biggest worry has been the way a lot of the convention business ( especially CES ) has been getting sour on Las Vegas. High room rates, some of the most expensive restaurants, expensive drinks on the strip have been leaving visitors feeling gouged and talking about going to other cities.
The addition of so many brand new high end rooms is going to free up more affordable, pretty high quality rooms in older, paid for properties like the Mirage, Paris and Mandalay.
There are definitely major head winds the city is facing, especially when cheap airfares are being threatened by record high oil prices. There was a recent article in the WSJ about the number of late night connector flights out of Las Vegas being reduced and now some airlines are going out of business.
I was still recovering from the shock of seeing Ernie Stevens and Frank Fahrenkopf together on the cover of CEM, so I hadn't seen David's article, but you can bet I'll read it ASAP, either this afternoon or on the bus ride home.
P.S.: In a previous article, Ayres called gambling "stupid" but, in this latest one, he appears to have taken up blackjack. Does that constitute progress (for him, I mean)?
I don't think the companies have as much room rate flexibility as they did in the past. When Harrah's went private, they added $10 billion to their debt load without any increase in revenue producing facilities (Rooms, table games, etc.). That's CityCenter plus 25%. I'm guessing most casino business models don't allow for any reduction in any revenue stream right now.
This article makes me embarrassed to be English! To be quite honest, Las Vegas is becoming much more popular among British culture, and people are all saying "lets go see it". I visited for the first time in February 2008, and I was amazed by how fantastic Vegas is! I mean, the architecture rivals that of Buckingham Palace, and everything is done so much better than that in the UK. Thats why I will be going back to Vegas, and as will many of my friends who are all amazed by the place, and want to get away from England - a country which can't help but critisize everyone for everything, and constantly wants to find fault in Americas decissions.
Vegas is a fantastic place, and I am sure it will just continue to grow and be ever more fantastic
Matt B, England
Surely this is the biting British sense of humour (not humor) in action, isn't it? Where ludicrous things are said with straight faces and an upper-class British accent? Because that's the only thing I can imagine when someone praises our architecture, Matt. ;D I would have to say our X-Y shaped NIMBY buildings are pretty sad compared to both modern (ex: 30 St Mary Axe) and classical (ex: Parliament) buildings in London.
CityCenter is supposed to raise the bar, with pretty much all the modern names behind the buildings that I think look pretty. It's about time, because there's so much more to architecture than a building that looks like the entire NYC skyline.
Until we can gamble in Parliament (and I'll see you at one quid Double Diamond when we can), we'll all have to settle for the Strip. ;)
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