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Vegas' Tourism Boom Now a Hard-Luck Story

Resort building in the '90s made the city less reliant on gamblers but more susceptible to an economic slump.

May 31, 2003|Jerry Hirsch | Times Staff Writer

Gamblers ignore recessions. Tourists don't.

During the torrid '90s, the spotlight in Las Vegas shifted from slot machines to elaborate themed resorts. A faux Eiffel Tower, Empire State Building, roller coasters and Venetian canals became part of the city's landscape. That hotel casino building boom, in which richly detailed themed resorts became the attractions, drew waves of tourists and lessened the city's reliance on gamblers for its income.

But luring tourists requires a healthy economy. And that's why Las Vegas has been stuck in a three-year tourism slump.

There are many reasons for this slowdown: The stock market slide crimped consumer spending. There are no new luxury resorts to draw visitors. There's no big-name fighter to replace Mike Tyson and draw mega-crowds. To those, add the Sept. 11 terrorist attacks with their chilling effect on the travel industry, the Iraq war and concerns about severe acute respiratory syndrome that have slowed the flow of tourists from Asia, and Las Vegas is hurting.

With Americans getting ready to take summer vacations -- typically Las Vegas' slowest season -- the gambling and entertainment mecca will have to wait at least until winter to see whether the hoped-for recovery has taken hold. Winter is the city's big season, and last winter Las Vegas suffered another disappointing period, with tourist traffic well below its peak of a few years ago.

"Even when the market recovers from all of this, it will only recover to the trend of before 9/11, flat to down" in tourist traffic, said Robin Farley, an analyst with UBS Warburg in New York.

The lengthy slump is evident in falling passenger counts at McCarran International Airport, in declining Clark County hotel room tax collections and in smaller gaming revenue for casinos.

Last year, Las Vegas casinos filled 84% of their rooms, a high number for most cities, but it was the lowest occupancy rate in Las Vegas since 1992, according to the city's Convention and Visitors Authority. And casinos collected less money for those rooms, as the average daily room rate dipped 5% to $99.90 last year, the Nevada Gaming Commission reported.

"There's no doubt that Las Vegas is more sensitive to the economy and world affairs" than when it was purely a gambling town, said Wallace Barr, chief executive of Park Place Entertainment Corp., which owns Paris Las Vegas, Caesars Palace and other resorts.

Casino executives and economists agree that there's little chance Las Vegas can repeat the boom period of the '90s. Although some hotels are adding new wings, only one major resort -- Steve Wynn's lakeside-themed La Reve resort planned for completion in 2005 -- is under construction. Most major casino companies have prime parcels where they can build, yet none has announced plans for a new resort.

The '90s building boom "created enormous interest in the city," said William Schmitt, a gaming analyst at CIBC World Markets in New York. "But now we are living with the hangover."

Wynn gets credit for taking the lead in rebuilding Las Vegas. When he opened the Mirage Hotel in 1989, it was the first of the mega-resorts, and his goal was to lure visitors interested in more than gambling. The Mirage, with its enclosure for rare white tigers and a fake volcano that spews water and flames every 15 minutes at night, triggered a hotel casino boom as builders tried to outdo one another.

In 1993 the 4,408-room Luxor opened, with its ancient Egyptian pyramid theme and King Tut's tomb and museum. That year, billionaire Kirk Kerkorian opened his MGM Grand, the nation's largest hotel with 5,034 rooms and a lion habitat.

In 1998, Wynn unveiled the $1.7-billion European-styled Bellagio, with its choreographed water fountains and an art gallery currently showing Andy Warhol portraits. One of Bellagio's big draws is the $110 ticket for Cirque du Soleil's nightly performance of music, dancing and acrobatics set in an aquatic theater. The hotel also has eight upscale restaurants -- including Picasso, with original works by the artist on the walls -- plus six bars and night clubs.

Visitors on the Strip now can see a long string of elaborate themed resorts, including Paris Las Vegas, complete with a 50-story faux Eiffel Tower and a one-third scale version of the Arc de Triomphe. And there's the New York-New York hotel with a 47-story replica of the Empire State Building and a 150-foot version of the Statue of Liberty.

By the time the Arabian Nights-themed Aladdin opened in 2000, the city had added a dozen major hotels on or within a few blocks of its famous Strip, while the number of hotel rooms doubled to 124,000.

"What other city built 60,000 hotel rooms largely along one street in just 10 years?" asked Hal Rothman, a University of Nevada, Las Vegas historian and author of the modern history of the city, "Neon Metropolis: How Las Vegas Started the Twenty-First Century."

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