Jeff is back with part two of his take on the Downtown Las Vegas scene and what might help it turn around.
Keep reading after the jump and if you missed part one, it's right here.
In a totally unrelated thought - don't forget that we're giving away an iPad.
Downtown Las Vegas is never going to regain its once-proud status as a top gaming market but there are several strategies casino owners and civic leaders could follow to keep Glitter Gulch from continuing on its long slide toward irrelevance.
Right off the bat, the most vital element in reversing the trajectory of the Downtown market is substantial investment in the casinos and their hotels, restaurants, bars and entertainment offerings. Too many owners are undercapitalized and unable or unwilling to spend the money needed to improve or refresh their properties and too much of the renovation that has been done has been done on the cheap.
There is only one big casino operator operating downtown, Boyd Gaming. The current recession isn't the right time to expect operators like MGM Mirage, Harrah's Entertainment, Wynn Resorts, Las Vegas Sands or Station Casinos to consider the purchase of or building a Downtown casino, and it's hard to believe they would want to do so even if times were great. But if the state's political movers and shakers were willing to make an aggressive play to pursue some of the big operators I think there is a slim chance at success.
The keys would be financial incentives and a pitch emphasizing the civic value of their participation. State legislators could set a special, 25-year gaming tax reduction to 5 percent (from 6.75 percent) for Downtown (and Reno, Carson City, Laughlin and the state's small rural markets) for new properties and for those that reinvest based on a dollar-per-gaming position and hotel room formula. Strip and Las Vegas locals casinos would keep the current tax rate. The disparity would be a tough sell as long as the recession persists but could be sold when and if the economy rebounds. The Strip's casinos won 53.4 percent ($5.55 billion) of the state's ($10.393 billion) gaming win in 2009, and the locals markets (Balance of Clark County market, $1.075 billion, 10.3 percent of state total; Boulder Strip market, $790.4 million, 7.6 percent; North Las Vegas, $286.2 million, 2.8 percent) accounted for another 20.7 percent of the state's total. Some adjustments would need to be made, giving the casinos in Primm and Jean (they are in the Balance of Clark County market) the opportunity for a lowered tax rate along along with the older casinos in downtown North Las Vegas (Jerry's Nugget, Silver Nugget, Opera House, etc.) and downtown Henderson (Eldorado, Rainbow and Emerald Isle). The tax rate deduction would only apply to about a quarter of the state's casino win, and then only if the owners reinvested substantial new money in their properties. That investment would result in additional jobs, more tourists and increased sales tax collections and would boost the fortunes of historic and struggling casino markets, including Downtown Las Vegas.
The financial incentives probably wouldn't be enough to attract the big players to invest downtown but a strong pitch from a persuasive mayor -- or maybe from soon-to-leave-office Las Vegas Mayor Oscar Goodman, who should be recruited to helm a new downtown redevelopment district that would include control over the Fremont Street Experience -- could help. It's worth the longshot try. But with or without the entry of the industry's big operators, the financial incentives should drive substantial investment in the Downtown market (and the state's other decaying markets). Some of the weak operators who have promised the state's gaming regulators that they would invest in their properties (Tamares Group at the Plaza, Las Vegas Club and Western, for instance) should be held to those commitments and all of the operators who are unwilling or unable to invest should be strongly encouraged to sell to operators who are willing and able.
New investment in existing properties should focus on substantial room refurbishment, broadening the range of restaurant offerings (Downtown casinos don't have much beyond the old-school trio of steakhouses, cafes and buffets) and increasing the in-casino array of lounge and other entertainment. If the existing casinos and their amenities are updated and improved, if the closed Lady Luck is reopened, if Binion's hotel rooms are refurbished and reopened and especially if weak owners are replaced by committed, capitalized operators, Downtown would be in a much stronger position.
Downtown casinos should continue working to develop marketing pitches to attract underserved customer niches. Boyd Gaming's three casinos and their strong relationship with Hawaiian customers is the best example, but there are other opportunities for imaginative owners. A small casino might dedicate a casino area to vintage slots, for example, (and maybe even offer some old-school table games like faro) to appeal to older customers. Another casino might feature Latin music in its lounges, use Spanish-language signage and employ bilingual employees. One thing is certain, though: Downtown's value orientation should never be lost. Customers should feel that they are getting a good deal Downtown, with good payback on slots, friendly rules on table games, strong food specials and affordable pricing in bars and restaurants and generous comps for gamblers.
It also is critically important that the City of Las Vegas continue aggressively working to improve the area directly surrounding the downtown casino district. The Fremont East club district, the World Market Center and several nearby condominium developments have been great additions, and the Mob Museum and the Smith Center for the Performing Arts will soon be significant attractions. The city should work to expand the tourist zone, creating a wider, visitor-friendly safe and fun environment. Las Vegas city officials should also use whatever leverage they have (control of its parking garage, for one) over the owners of Neonopolis to get them to keep and attract tenants who will benefit the city and, hopefully, attract tourists.
The biggest boon to the area would be a sports arena with an NBA and/or NHL team; a lesser improvement but still a plus would be a new minor league baseball stadium (as long as the 51s or whatever they'll be called agree to stay in the city and play there). Las Vegas' City Council appears much more willing than the Clark County Commission to consider using tax-increment financing to help a developer fund a sports arena and/or stadium, and Goodman and his successor should continue working hard to lure a developer, a team or teams and line-up the political support for the tax deal. It's important for Downtown to capture the first-mover advantage that would likely prevent a competitor from building elsewhere in the Las Vegas Valley.
Casino owners who fund the Fremont Street Experience should boost their contributions to the collective enterprise and help it pay for better and more frequent live entertainment and fresh updates for its Viva Vision canopy shows. Looking at the Las Vegas Convention and Visitors Authority survey numbers, it's clear that the Fremont Street Experience is vital to luring Strip visitors Downtown; it needs to be nurtured and refreshed.
Transportation is a tough issue for Downtown casino operators. Taxis from the airport to downtown casinos are much more expensive than trips to Strip hotels, a big disadvantage for a market that emphasizes value. City officials and Downtown casino owners should encourage the Regional Transportation Commission to add frequent bus service with luggage-carrying capability from McCarran Airport to the Fremont Street-area casinos. For drive-in customers Downtown casinos need to improve their existing parking garages, stop charging for parking and add additional free parking space. Sure, space is limited but there is undeveloped space, including Boyd's big lot across from Main Street Station.
-- Jeff Simpson, August 2010