Can Las Vegas ever be overbuilt?
By STEVE FRIESS
Every now and again, if you’re around Vegas long enough, you hear about the June 20, 1955 issue of Life Magazine with a Moulin Rouge showgirl on its cover. The issue is, to many, the “Dewey Defeats Truman” moment for Vegas journalism for the question its headline asked:
“Las Vegas—Is Boom Overextended?”
It’s a punchline to many on the Strip. Six months ago, Sheldon Adelson himself referenced it in an interview in advance of the Palazzo opening in response to my question about whether the city could be overbuilt. The implication was that almost since the dawn of the destination, naysayers have wondered whether the city could continue to sustain its own urge to constantly grow.
The reason I bring this up is because, by some quirk of fate, I found a copy of that very issue for sale for a mere $25 at the Casino Chip and Gaming Tokens Collectors Club convention at the Riviera last week. I’d bought a copy before, but it was sealed in plastic and never read; the fact that I now had a shot at another copy, unwrapped, on the exact 53rd anniversary of its publication was a minor thrill I couldn’t refuse.
It also took on more resonance this year because Vegas is in one of its worst slumps ever. Occupancy and room rates are down, gambling revenues are on track to fall for only the second time since 1970, the last time being in 2002 following 9/11.
At the very same time, the frantic building continues unabated. The various CityCenter structures, the Fontainebleau, Wynn’s Encore, Echelon and a new Caesars tower all are poised to add more than 19,000 high-end rooms to the already staggering inventory in the next couple of years. Now Adelson is looking at moving the Sands Expo Center elsewhere to make room for 7,000 more rooms, Wynn wants another 5,000 in place of his golf course, Station Casinos wants 10,000 more just west of the Strip in its Viva project and someone—maybe the Plaza folks, maybe not—is going to do something big on the former Frontier property.
Which brings us back to where Las Vegas was in 1955 when that seemingly foolish headline and article were written.
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2 comments:
A couple of years ago, I noted in my newsletter that there wasn't enough high end traffic to fill all the high end rooms being built, and that "Mom and Pop Tourist" (the very ones complaining that Las Vegas had turned its back on them) would actually be able to live large at cheap room rates because the glut of high-end rooms couldn't all be filled by wealthy visitors.
I obviously didn't see the downturn in gas prices, but I think the bigger picture invokes two (unanswered) questions:
1. How low will room rates go? At what point does upper-class hotel simply not book the room because it is cheaper to keep it empty (if there is such a point)?
2. Will the concept of cheaper rooms drive gaming revenues (as it has in past decades) or has the 6-5 blackjack and tight slots burned enough people that they simply aren't gambling like they used to? My feedback suggests that visitors are gambling less when they come here because they are tired of watching a $20 bill go bye-buy in a quarter slot machine in less than 5 minutes (as a now regular occurance).
Although not a gaming/tourism question, I also keep asking myself why are so many people still moving here? You think the national (and international) bad press about Las Vegas would make people think twice. Outside of anything unionized and/or gaming related (jobs in decline at the present), there aren't high-paying jobs at every turn.
P.S. I have a solution to the school funding program:
We didn't used to have school funding issues. We also didn't used to have two million people here. If Las Vegas parents of the past wanted kids here to have a good education, it was called Bishop Gorman (a private school).
If you moved here with kids the past few years, that is your own damn fault. YOUR kids are causing the overcrowding, not the kids of parents who have been here for years.
If you want them to have a better education, move to a state with a reputation for great schools and quit sucking down the limited amount of gaming tax revenue we have here.
Nevada's state motto is Battle Born... not Better Schools.
I'm out.
Ted
Gambling has certainly taken a back seat in Vegas to shopping and eating. What used to be a fairly cheap place to vacation for a few days is now a major expenditure for most people.
The demographics are changing in a big way. The town has been taken over by the 20-30 crowd, and from what I observe they arent gambling.
When I was there last week I wanted to kill some time while I waited for my friend to lose his roll at the craps table. I put $10 in a video poker machine and played 25 cent hands. I went through 21 hands before I got a single pair of jacks or better. The machines, it seems to me, have been jiggered with to cut back on the pay offs. Once this gets out (true or not) LV is going to be hurting in a big way. LV cannot afford to get a reputation as a crooked place.
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