Las Vegas has staked its future on 320-thread-count linens, 2,200-square-foot suites, filet mignon, Chanel, seaweed wraps and $5,000 bets on slot machines. The latest batch of mega-resorts revels in luxury. Thrift mostly vanished with showgirls and the Rat Pack.
Now some observers are wondering whether that was a wise bet.
The recession has hobbled Las Vegas casinos, once lauded as impervious to the national economy's ups and downs. Comparing this October with the same month last year, most everything has plummeted: the number of visitors, hotel occupancy, the number of conventions.
Gaming revenue on the Strip fell 25.8%. And the average daily room rate tumbled 14.3%, a huge blow to profits. At Encore, the leviathan that casino mogul Steve Wynn opened this week, rooms are starting at $159 in January. When his Wynn Las Vegas resort debuted in 2005, $250 was a bargain.
"The world has changed, and we've changed with it," Tom Breitling, senior vice president of strategy and development, said during a media tour of one of Encore's 2,034 plush suites.
Analysts say Las Vegas Boulevard, now pocked with empty lots and stalled construction projects, should bounce back once the credit crisis wanes and tourists feel confident enough to splurge on vacations. But although previous downturns passed as quickly as a thunderstorm, economists expect this squall to linger through 2009, push Clark County's unemployment rate as high as 10%, and wipe out casino projects.
Tourism is Nevada's primary breadwinner, and the Strip, with more than $6.8 billion in gaming revenue last year, is the biggest cash machine of all. How its high-end image plays to tourists during and after the recession will affect the entire state.
"People might want luxury, but are they willing to pay for it?" said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. "We might have missed our brand."
Las Vegas has always thrived on showmanship and glitz. Only in decades past, it was purposely affordable. Benny Binion, who launched the World Series of Poker, talked about making "little people feel like big people" to get rich. The creator of Caesars Palace reportedly declined to name it "Caesar's" because he wanted every guest to feel like an emperor.
The idea of Las Vegas as cheap, if somewhat tacky, carried it through other economic slumps, Schwer said.
