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LAS VEGAS T


by Sharon Harris


he Las Vegas economy has suffered the brunt of the financial crisis since 2008; the bulk of the Nevada economy is linked to gaming, so any downturn proves devastating. As a result of declining gaming revenues, Las Vegas faces the highest home foreclosure and unemployment rate – 14.1 percent – of any major American city. Las Vegas and Nevada must now confront unprecedented challenges.


A recent Las Vegas Metropolitan Area Social Survey revealed that 40 percent of the locals


would leave Nevada if possible. Only eight percent of Las Vegans are natives, so residents feel no loyalty to remain where they cannot find work. Also, more than 80 percent of Las Vegas valley households owe more than the value of their homes on their mortgage. The future employment picture looks uncertain. Flat or decreased gaming revenues have


delayed or canceled casino property expansions and operations as operators have adjusted their current workforce and hours. Las Vegas derives much of its visitor traffic from convention business, which dipped during the past 12 months. The Obama Administration has received partial blame for the decline, following President Obama’s much publicized remarks in 2009 against tax- deductible conventions and potential reckless spending in Las Vegas. After those statements, hundreds of millions in convention bookings were cancelled. Following a slight bump during early 2010, the 41 Las Vegas “Strip” casinos’ revenues dipped over six percent in May, the latest figures prior to publication. The Strip contributes more than half the state’s gaming win, so declines harm the entire state. Downtown, the gaming wins have dropped for the 24th consecutive month. Statewide


declines were slightly lower. Unlike many other states that added gaming as an economic tool to complement their multiple industries and state income taxes, Nevada depends on gaming as its key economic engine. Towns surrounding Las Vegas have experienced mixed results. North Las Vegas and Boulder Strip casinos posted gains while Laughlin and Mesquite clubs posted losses. In a domino effect, visitor numbers have also fluctuated over 24 months, due in part to almost five percent fewer flight frequencies into Las Vegas. Although recent monthly statistics reveal that business head counts have slightly increased this spring, with greater convention attendance, the leisure visitor is now more likely a drive-in guest. The car traveler typically stays a shorter time and spends less while in town. Neighbouring California’s severe budget crisis has dramatically impacted Las Vegas in 2009, as 26 percent of Las Vegas visitors came from California.


Currently, Las Vegas has a 148,542-room inventory, some 7,900 more than a year ago.


Adding to the glut, the Cosmopolitan of Las Vegas resort casino will introduce 2,995 rooms when it opens on December 15. It is the only property scheduled to open, as multiple projects – including the Fontainebleau and Echelon – have stalled along the North Strip. 2009 ended with a bang as MGM Resorts International debuted its 76-acre $8.5 billion, mid-Strip CityCenter development, with the Aria Resort and Casino at its center. Aria added nearly 4,000 new hotel rooms to Las Vegas. CityCenter also includes four residential condominium buildings: two Veer towers, Vadara and Mandarin Oriental. Aria’s 2010 initial occupancy and earnings have proven disappointing, losing $66 million in the first quarter. The 63 percent hotel occupancy rate was lower than its nearby luxury competitors.


MGM officials look to steadily grow the business and appeal of CityCenter over time.


They recently allowed Senator Harry Reid and President Barack Obama to use CityCenter as a backdrop for a rally for Reid’s reelection campaign, which showcased the property to the public. As millions of non-gamblers visit Las Vegas for its non-gaming restaurants, spas, shopping and entertainment amenities, they will continue to be a focal point of expansion.


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