Inside Asian Gaming

INSIDE ASIAN GAMING | June 2013 22 history—that resulted in almost 20,000 new hotel rooms opening into the teeth of an economic whirlwind. The occupancy rate citywide is down from 94% to 84% and this has driven down the average daily room rate, which is off its 2007 peak by 20%. With 39 million visitors and more hotel rooms than any city in the country (150,000-plus), Las Vegas sold more room nights last year than ever, 46.5 million, 2.5 million more than in 2007, and it has come away with total room revenue that has fallen over the last six years by an average of $780 million. A similar sort of inversion is apparent in the MICE sector. When it comes to the really big conventions and trade shows, Las Vegas is No. 1 in the country. Fifty-three of the 250 largest events were held there in 2012, according to TradeShow News Network , including four of the top 10, ranked by square footage, and that includes the largest, the Consumer Electronics Show. But the total number of events is down more than 9% since the recession. Tellingly, attendance is down more than 20%, which reflects the impact of the jobs lost since the crash and can be taken as a fair gauge as well of how the business community is feeling about things—and this hasn’t been good for Vegas either, because mostly it was MICE supporting occupancy rates and room prices that for about 10 years were the envy of hoteliers nationwide, not to mention the lavish spending on F&B and entertainment. A recent Moody’s report may have said it all: “The Strip’s hotel capacity is built for stronger economic conditions than exist today.” The Return of Cheap Money Las Vegas wasn’t Genting’s first choice for its American super-resort. Miami was. Plans there were for 5,200 rooms in four hotels designed to look like skyscrapers of coral reef. There were going to be 1,000 condominiums, a convention center, a virtual city of shopping, dining and entertainment, and the largest casino in the world. But laws had to change for the all-important casino portion to happen, and you don’t buck DisneyWorld in the Sunshine State, and after two years of some of the most expensive lobbying in Florida history, Genting gave up. Analysts aren’t so sure about Resorts World Las Vegas either. Fitch Ratings Service is guarded, pointing to the 1,620 rooms that will be entering an oversaturated market in Las Vegas’ bottom line, although it has improved measurably since the worst of the Great Recession, is designed around average Americans spending the kinds of money they thought they could spend when ballooning home values had them thinking they were rich. previous record set in 2007, that last year of living dangerously. Only they’re not coming as often and they’re spending less. Over the last five years, first-timers have declined from 18% of visitation to 16%, according to a survey of tourists conducted annually on behalf of the Las Vegas Convention and Visitors Authority. Repeat visitors polled last year have cut out one trip per year compared with five years ago. Passenger traffic at McCarran International Airport hardly budged from 2011’s total and, according to LVCVA figures, is down more than 12% from its 2007 high. These aren’t the right numbers for a town entirely dependent on a single industry that has invested massively in non-gaming leisure spend and depends on it for 60% of its revenues. It’s not enough for some smart guys in Manhattan to think $31 million is a rational price for an acre of ground. To flourish, Las Vegas needs tens of millions of drunken sailors on a regular basis. It planned for that, laying down a pipeline of expansion and major new resort development beginning in the second half of the last decade—led by MGM Resort’s CityCenter, at $9 billion the most expensive commercial construction project in US year high in May, according to both the Bloomberg Consumer Comfort Index and the benchmark monthly gauge of consumer sentiment compiled by the Conference Board. A preliminary reading of consumer sentiment for May compiled by Thomson Reuters/University of Michigan was the strongest since July 2007. How can this be? Well, the psychological high of a rising stock market is part of it. But it has more to do with the belief that housing prices are on the mend. The country has seen 10 consecutive months of gains in the closely watched Standard & Poor’s Case-Shiller 20-city index of property values. It was up 10.9% in the year to March, its largest increase since the bubble days. Consumer spending, which accounts for 70% of US gross domestic product, has responded, rising 3.4% in the first quarter, which was more than initially estimated, although this isn’t coming from robust home equity but from a decline in the rate of savings, which dropped from 5.3% in the fourth quarter to 2.3% in the first three months of this year. At any rate, it’s not as if people aren’t coming to Las Vegas. They are, a record 39.7 million of them last year, a 2% increase over 2011 and about 500,000 more than the IN FOCUS