Vegas Scrambling

The casino's pain is your gain! It's something of a bargain hunter's paradise right now. I hope to be back there to see Kylie in early October to re-recheck it out.

I read somewhere that $8.00/gallon gasoline would effectively kill Vegas' business model. I hope that doesn't happen for a good while yet...:

The Strip's business model for the 21st century, which was to tap into an ever-expanding supply of free-spending visitors clamoring for first-class hotel rooms, four-star restaurant fare and high-priced shows, has been shattered by its worst recession in decades.

...Tourism is down for the second year in a row, and the people who come aren't spending with the abandon of the past. ... In 2007, the peak year, 39.2 million people visited. Last year 37.5 million visitors came to town. Tourism officials say convention business is down about 27% from a year ago. If current trends continue, Vegas may barely break 35 million visits this year, the lowest level since 1999.

...Room rates on the Strip are so steeply discounted that the top resorts will put you up today for the same price that downscale hotels charged two years ago.

At the Encore, which Vegas impresario Steve Wynn opened in December as an extension of his luxe Wynn resort, some customers were offered two-night stays this summer for $99. For some nights this fall, promotional rates as low as $90 are being offered at Bellagio, a premier Strip hotel where rooms customarily can reach $500 or more.

...Cirque du Soleil, the acrobatics juggernaut that dominates the Strip with six shows, has done something that veteran Vegas watchers find more mind-blowing than anything it presents onstage: It's knocking as much as 40% off ticket packages for two.

"Cirque never discounted for anyone," says Anthony Curtis, the publisher of Las Vegas Advisor, an insider's guide to deals.

...Not only has the economic collapse been more extensive and severe than in the past, but the town has much more at stake. In 2001, Las Vegas had 125,000 hotel rooms to fill; at year-end 2008 the inventory was 141,000. An additional 16,000 have been scheduled to open in the next two years.

As a rule of thumb, an increase of 200,000 new visitors per year is required to fill every 1,000 new rooms -- meaning that 3.2 million new visitors would have to come to town to absorb the new construction.

Failure to reverse that trend would shatter one of the town's articles of faith: that new, glitzier properties always generate the tourism to fill them.

That axiom has held since Wynn opened the 3,000-room Mirage in 1989. Many then doubted his glossy property could make enough to pay off its heavy debt. Instead it was a roaring success. A wave of themed resorts followed.

..The most graphic illustration of the conflict on the Strip between high expectations and harsh economic reality is an 88-acre lot across from Wynn Las Vegas, an expanse of sandy waste harboring rusting steel frameworks. This is the site of Echelon, which was launched as a $4-billion luxury resort by Boyd Gaming Corp.

...Boyd acquired and imploded the storied Stardust hotel. By the time of Echelon's groundbreaking in June 2007, the project had expanded into a complex of four hotels totaling 5,300 rooms, a convention center, two theaters and a luxury retail mall. Its new price tag of $4.8 billion made it the second-costliest project on the Strip, behind only the $8.4-billion CityCenter.

One year later, after investing $700 million in the project, Boyd shut it down. At the time, the company cited "economic conditions" and the credit freeze, but although both have begun to moderate, it hasn't reconsidered its decision.

"We continue to look at the project, and we don't see a natural restarting point," Boyd Chief Executive Keith Smith said in an interview. "We're taking the rest of 2009 to analyze our options."

...Some casino industry experts fear that continued heavy discounting will dim the Vegas aura for the longer term.

"You've got to drop your rates, but you don't want to create a sense that this is a discount experience or that the experience itself has been diminished," says Billy Vassiliadis, chief executive of R&R Partners, the Las Vegas public relations firm that created the renowned "What happens here, stays here" marketing campaign. "It's been a real dilemma."

Another concern is that bargain hunters lured to the Strip by cut-rate rooms may not belong to the market segment that its business model -- a symbiosis of expensive accommodations, gourmet dining and entertainment -- relies on. Rather than dining at a hotel's high-margin Wolfgang Puck restaurant, for example, they may hop across the street for a fast-food meal.