— Sitting in the poker room at the MGM Grand Hotel in Las Vegas late last month, grizzled Texas hold ’em players kept one eye on their cards and another on the flat-screen TV monitors around the room.
While various sorts of sports programming are most often displayed 24/7, this time a much more intense and foreboding “competition” was being broadcast. C-SPAN was televising the vote from Congress on whether the economic bailout bill would pass.
In what felt like an instant — the time it took for players to muck their cards to an ace-high flush — the Dow was 500 points lower and still heading south. At that moment, the dealer looked at everyone and said, “Thanks for supporting the Las Vegas economy. We appreciate it.”
One player’s response: “Well, I’d rather lose my money here than on Wall Street.”
Wall Street and the Las Vegas Strip may be about 2,500 miles apart, but the fallout from the subprime mortgage crisis and the turmoil surrounding the economy is certainly having an effect on the gambling mecca.
According to the most recent statistics from the Las Vegas Convention and Visitors Bureau, the numbers are striking. Gaming revenue in July was down 15 percent compared with the same time last year. Hotel occupancy dropped almost 5 percent and visitors arriving via airplane nearly 9 percent.
The decline is precipitous. While not as dire as the immediate post-Sept. 11, 2001 climate — tourism was down nearly 50 percent immediately after the terrorist attacks, and that lasted for nearly six months — these recent fall-offs have Las Vegas veterans taking notice.
“We’re feeling it in a variety of ways,” said Alan Feldman, senior vice president of public affairs for MGM Mirage, one of the biggest hotel-casino conglomerates in town. “People are spending less. The only people who aren’t are the incredibly wealthy, and it wouldn’t be surprising to see a tightening of their belts too.”
And while hotels are doing their best to fill rooms, they’re certainly not getting the high prices they're been accustomed to.
“Our occupancy is holding steady company-wide, but our biggest challenge is the rates, which are down 15 percent” Feldman said. “After that, everything follows suit, including gaming revenues and shows.”
Visitors go to the well (drinks)
Feldman and others say folks arriving in town for a few days of R&R continue to have fun but are clearly cutting back on luxury items that, at one time, wouldn’t have given them second thought.
That $150 bottle of wine at dinner? No more.
“The higher-end restaurants are less crowded and the coffee shops are busier,” said Feldman, a 19-year veteran of MGM Mirage who has seen many highs and lows in the Vegas economy. “I passed by the buffet at the Bellagio today and the line was out the door.”
Bartender Dave Bergeron agreed with that assessment. Standing on the casino floor of any major Strip hotel and seeing overflow blackjack and craps tables, one would surely ask, “What recession?” Yet, it’s the folks in the trenches — the valets, waitresses and sports book clerks, for instance — who can sense the slowdown.
“Oh, yeah, we’re definitely feeling it,” said Bergeron, who serves up booze at the MGM Grand. “People are ordering well drinks instead of high-end stuff.”
Over at the Rio, a staffer at sports paraphernalia shop Field of Dreams who asked not to be identified said, “Foot traffic is definitely down. People are tighter with their money.”
“We’ve gone through cyclical business cycles, including Sept. 11, the gas crisis and other recessions. One of the differences now is coming to terms with the fact that the length of this one is longer,” added Terry Jicinsky, senior vice president of marketing at the Las Vegas Convention and Visitors Authority (LVCVA).
Feldman said he got a sense in August 2007 that business was hurting, and then, by New Year’s, knew the tough times being felt in the rest of the country had come to the desert.
With all the gloom, though, Las Vegas is hardly going bankrupt. More than 22 million visitors visited through July, infusing the economy with $5.1 billion, according to the LVCVA.
“All things considered, most everyone in Las Vegas acknowledges the fact that we’re being hit by the downturn but we also know we’re fortunate in relative terms,” said Jicinsky. “We haven’t been hit as hard as other sectors like retail and the automotive industry. We work to keep it in perspective.”
Gentlemen, start your engines
At the world famous Olympic Gardens gentleman’s club, owner Dolores Eliades said that while revenue might be off a bit, many guys are still willing to fork out cash as quickly now as when the economy is booming.
“Some businesses tend to do better in tough economic times because people want to forget their problems,” Eliades said, adding that businesses catering to adult entertainment can withstand tough times better than most.
If the bustle of construction around town is any indication, there’s certainly a sense that, at some point down the road, business will return to normal — even possibly outperform what it has done in the past.
The major project that’s the talk around town is CityCenter, a joint venture between MGM Grand and Dubai World. The complex is scheduled to open in November 2009.
A massive 67-acre, $9.2 billion urban metropolis, CityCenter will have 500,000 square feet of retail space, house the 4,000-room, 61-floor Aria resort, the internationally prestigious Mandarin Oriental Hotel, and the Vdara and Harmon hotels and residences, which will offer nearly 2,000 condominiums combined.
Of course, with money so tight these days, not every project is moving on. The Boyd Group recently shut down its Echelon development when financing became difficult to obtain.
Both Feldman and Jicinsky agree that while times are tough, aggressive marketing and the ability to create value travel packages for tourists will help Las Vegas weather the storm.
“We’re going to continue to make offers that are as appealing as possible,” Feldman said, “and give people an option in terms of price points. We have to continue to do that.”
Said Jicinsky: “The hotels are attune and engaged. A turnaround in the economy will help Las Vegas. We all need to work together to turn this around.”