The rise in oil prices is a menace to the business of Las Vegas:
The onset of global slowdown, high petrol prices, and a nation-wide housing slump is spelling disaster for a town that owes every aspect of its wealth – from that gaudy replica of the Eiffel Tower to those scale models of Venetian canals and the Pyramids of Egypt – to its ability to inspire free-spending hedonism.
With Americans cutting back on luxuries, and the price of transport rocketing, the so-called "Vegas vacation" is facing the axe. This week, as the nation celebrated Independence Day, major hotels were taking stock of a fall in all-important room occupancy rates from their usually impressive 95 per cent levels to nearer 80 per cent.
More worryingly, new figures showed gambling revenue has also dropped – a further 3 per cent this month – starting a price war between worried firms anxious to lure punters back. Hotel rooms, which last year averaged $130 each, now go for less than $100 (£50).
At the vast Planet Hollywood resort, the clatter of fruit machines and poker chips was this week replaced by an uneasy – and, for Vegas, very unusual – calm. A large if slightly tatty double room could be found for less than $80.
No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it's starting to hurt even the town's Elvis impersonators, wedding chapels, and sex industry. When money's tight, the prospect of stuffing another $20 bill into a lap-dancer's gyrating stocking-top somehow doesn't seem quite so enticing.
"This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.
"We've seen a drop in custom here too: maybe 180 people coming in when before we got 200. It's a difficult business, but the girls still have to make a living. We will survive because we own our own premises, we have a good name and location, we don't buy on credit, and we've been around for a long time. But we're very lucky in that respect."
...Local bankruptcies have quadrupled. The property market, which rode the wave of a boom for most of the past decade is now below its peak by anything from a quarter to a third (depending on whose figures you believe), while Nevada now boasts, if that is the right word, the nation's highest foreclosure rate.
The number of empty homes has caused a health scare after it emerged that mosquitoes – possibly carrying the killer West Nile virus – are breeding in abandoned swimming pools. "We've had crews pumping out pools every day this week," Devin Smith, who manages the city's Neighborhood Response Division, told the Las Vegas Review Journal. "Two years ago, we may have pumped six pools in a season. Now we're probably pumping that a week."
..."With the high oil prices, people don't have much disposable income to spend on gaming and entertainment. So we are looking at a short-term slump, certainly. In the longer term, everything depends on what's going to happen to oil prices."
But the biggest threat of all is that Las Vegas might somehow be perceived to have lost its buzz. Like any tourist economy, the city's fortunes depend squarely on being seen as a "hot" destination, a tag that becomes difficult to justify if potential visitors hear reports that the place is struggling.
As a result, no major strip operators are publicly advertising their new low room rates. None would be interviewed for this article, regardless of the concerns shareholders might have for their fortunes. A spokesman for Wynn Las Vegas, for example, said "Respectfully, we must decline" the opportunity to discuss trading conditions.
...Dolores Eliades says the history of Las Vegas shows it will find a way to adapt and survive. "Historically, Las Vegas is able to withstand the problems of the rest of the country. When people face hard economic times, they come here to get away from their problems. In the US, people are escape artists, and they deal with problems a little differently from the rest of the world. I believe the history of this town proves I'm right, I really do."
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