Where is Bugsy Siegel when we need him?
the views of Mickey Charles CEO and Research Editor Rose Gollhofer at Sportsnetwork.com
“What happens in Vegas stays in Vegas” is the theme song of Sin City at present and it has drawn a great deal of attention in recent years. But, what is staying in Vegas presently are empty rooms, condominiums that are being considered as temporary residences for the homeless, as well as more excitement and action at the penny slots and buffets than has ever been the case. Yes, Vegas is still open for business but what would happen if you threw a party and no one showed up?
As with so many other destinations in the U.S., the financial situation is not good. Escapism for most is on the rise but the results at the cities circled as vacation destinations and resorts advantaged are on the decline. Hell, some business is better than no business and one need not take a class in negotiating tactics to get the best prices possible. A simple, “They [whoever “they” are] are only charging [fill in the blank] and I have to make a decision soon” will work just about every time. Not with the greedy and over-priced airline but certainly with the hotel(s).
Vegas is optimistically pumping up their predictions for growth as they envision the economy moving at a faster pace. But the turmoil in the Middle East and the Republicans hell bent on cutting the middle class to slightly lower class down to homeless status is a clearer picture of a reality that will have a negative impact where those with rose-colored glasses see otherwise.
That which is deceiving is that visitor traffic is on the increase and casino revenue inches upwards. Half a glass is better than an empty one. True. The visitor traffic is like a shooter who is hot at the crap table and holds the dice until the first seven rolls and they sweep his chips off the table like a Dyson vacuum on a rampage. And, casino revenue moving up is equivalent to saying that twice as many Lutherans converted to Judaism this year than last. It was only one last year. It is all in the perspective and definition.
It does not take much to excite casino executives these days…when there is a drought; even the slightest sprinkle translates to a downpour in the distance. That is why Jim Murren, chief executive of MGM Resorts was heard to say that “Las Vegas has a greater sense of excitement than it has had the last couple of years.” That said, and heard, construction crews have not assembled hastily to find out where to start construction of the next 3,000 room resort.
Hotel rooms that went for $200 plus a night are now routinely available for double-digit prices. New people, new players, who come for those deals are abundant but they do not spend much more than the cost of the room.
The national economy has record unemployment…and they can only count those on the dole, not those that can no longer collect…and the local economy of Vegas lags behind but that does not portend good news. One is just poorer than the other with a gilded tin cup instead of a copper one. Las Vegas, over about the last three years, has lost somewhere in the 140,000 jobs range, including 80,000 high-paying construction ones and 20,000 leisure and hospitality. Fourteen percent unemployment, among the highest in the nation. Airlines are cutting routes and raising fares, there is a very sharp drop in international visitors who have circled Macau on their maps and any depreciation of the Euro is another nail removed from the “Welcome to Las Vegas” sign that greets all as they arrive.
Is help on the way? Not with gas prices approaching $4 USD per gallon over here and curtailing all the west coast traffic that always found it easy to head down to Vegas for the weekend, or longer. Suddenly, if one wants to wager at that local Indian casino, the one that has the architectural look and feel, the internal ambience and copied style of Vegas, the one that is looking better and better. Any major recovery in Vegas is a year distant and, no, it will not, cannot, shut out the lights. It can dim them for awhile but darkness? Nope.
Added to all of this, with emphasis on “added,” is the enormous challenge of an oversupply of gaming and room capacity…trying to fill a 100 lb. bag with only 50 lbs. of you know what. It cannot be done, whether you spread it out or recycle it endlessly. You have to go with what you got, as they say. There were 11,000 rooms brought on line in December of 2009 with the opening of MGM Resorts International CityCenter and the 12,995 rooms at the Cosmopolitan of Las Vegas. Rabbits do not multiply that fast! That means 149,000 rooms or so in town.
Not to be forgotten (without any interference from Meyer Lansky (born Majer Suchowli≈Ñski; July 4, 1902 and removed to a larger enclave of colleagues on January 15, 1983), known as the “Mob’s Accountant,” who thought Bugsy was over budget when he spent some $2 million or so on The Flamingo, causing his untimely departure from the world), is the fact that there has been a work stoppage on major Strip projects. Brought to a screeching halt were the Echelon, Fontainebleau, St. Regis Condo Tower and Wyndham Desert Blue. Lost construction activity of $1 billion in 2008 and $2 billion in 2009 and Bugsy was over budget?!?!?! You have to be kidding!
Vegas will not disappear, bankruptcy of the city is not going to happen and the crowds to which it has catered for years will return. Not in the droves of yesteryear for, during this recession, they have found similar pleasures closer to home as casinos crop up everywhere, more and more in the mode of Tinsel Town…like Parx Racing and Casino in Pennsylvania, in suburban Philadelphia. Step inside and you are, for all intents and purposes, in Vegas absent The Strip and all else that Vegas has. And that, my esteemed and knowledgeable friends, is the key to it all. If you want to gamble and go home, Parx is the place; if you want to gamble and spend a few nights, see some races, shows on the level of Vegas, dining that is also equal to that found out in the desert, you have it. The total excitement, allure, atmosphere of Vegas, from Hoover Dam on a day trip to a walk down The Strip…to shop at Bellagio, Venetian, MGM, Mirage and the others of similar note, nope.
Vegas, like the rise of the proverbial Phoenix, will achieve its former magnetism, surge of tourism, growth and intrigue. It will continue to captivate and, like Grand Canyon, off in the near distance, be an attraction and gambling Mecca for the whales and guppies. All will swim in the excitement. That is a given but, for now, the water level is low and the price of admission matches.
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