Tuesday, September 08, 2009

More about the problems in Las Vegas caused by the recession...luck runs out

The Los Angeles Times chronicles Vegas economy problems

Meanwhile, relentless price-cutting remains the watchword on the Strip. Wynn Resorts recorded revenue in Las Vegas of $291.3 million in the first quarter of this year, only a hair ahead of the $287.2 million in the same period of 2008, despite having doubled its room inventory by opening the 2,034-room Encore in December.

Wynn reported that discounts lowered its average revenue per room to $194 for the first half of this year, from $289 a year earlier -- although its aggressive promotional rates didn't help overall occupancy, which fell to 88% from 96.2%.

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.

The business model was a losing proposition from day one.  It was wrong for the mega casinos to shift their focus from gambling to catering to a smaller more wealthy customer base combined with business expense account convention attendees.  Extremely short sighted. And frankly Harrah's has cut its maintenance budget so much that their properties are dirty and they lack the staff to adequately serve their guests causing their appeal to guests to greatly diminish.  Not to mention the lack of any new slot machines on the floors. Las Vegas is not the same.

Click this link to read the entire article.