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Vegas feeling the pain of fewer foreign travelers

Hotels and casinos had hoped that international visitors would help offset the recession because they typically stay longer and spend more than U.S. travelers.

February 17, 2009|Ashley Powers

LAS VEGAS — At the upscale Joyful House restaurant in Las Vegas' Chinatown, it used to be common for tourists or convention-goers from Japan, Hong Kong and China to drop $300 apiece on a seafood feast.

But there is a lot less joy in the dining room today. The big spenders have disappeared.

Business during the usually robust Chinese New Year was off 35% from 2008, said manager Stanley Ma. The restaurant has reduced employees' hours and whittled bills for tour groups. In recent weeks, it began advertising lobster -- for 50% off.

Las Vegas had hoped that international visitors -- a bright spot for much of 2008 -- would ease the pain of the recession because they typically stay longer and spend more than U.S. travelers.

But in November, international arrivals to the U.S. slipped almost 9% from 2007, according to the Department of Commerce. The number of visitors from Canada, Mexico and Britain slumped; those countries supply about 75% of Las Vegas' foreign tourists. Arrivals from Asian countries dropped almost 14%.

For The Record
Los Angeles Times Wednesday, February 18, 2009 Home Edition Main News Part A Page 2 National Desk 2 inches; 76 words Type of Material: Correction
Las Vegas visitors: In an article in Tuesday's Section A, about a decline in foreign visitors to Las Vegas, two of the percentages on an accompanying pie chart were mistakenly transposed. The second largest pie segment should have been labeled to show the 28% of visitors who said they would definitely or probably return to the city, and the smallest segment should have been labeled to show the figure of 17% who were uncertain about returning.

In December, gaming revenue on the Strip plunged more than 23%. Casinos have shed thousands of jobs. Wynn Resorts, whose Las Vegas hotels are favorites of high rollers, recently announced cost-cutting measures.

In recent years, casinos worked to entice free-spending Asians by opening authentic Far East restaurants with noodle chefs and feng shui decor, and by hiring singers and comedians popular in China and Japan. Although some Asian high rollers are still arriving, tour operators are groaning.

David Huang, whose company, Chinese Hosts Inc., runs bus tours, books rooms and plans meetings, said his bookings had dropped 50%; most days, many of his 15 buses are idle. Instead of making $10,000 a month, he's losing about $5,000.

"I just hope we can live through it," he said.

Birch Yeh, a manager at Lion Travel in Los Angeles, said his company used to take 30 to 35 Taiwanese groups each month to Los Angeles, San Francisco and Las Vegas, where they sightsee on the Strip, enjoy dinner and go to shows. The number of groups has shrunk to as few as 15 a month. Yeh blamed the global recession and the strengthening dollar.

"When people come here, they spend money," he said, "but nobody's coming."

On the Strip, revenue from baccarat -- the preferred way to gamble for many Asian high rollers -- fell 49% in the fourth quarter of 2008, to $156.3 million, said Frank Streshley, senior financial analyst for the Nevada Gaming Control Board. Pai gow poker, another favorite of international bettors, tumbled 43.6%.

At Tao, the Venetian resort's multistory, Asian-themed nightclub, "if you came in on a Thursday, you wouldn't realize the world economy is in shambles," said Howard Schwartz, a VIP host whose clients include jet-setting foreigners. "Top-end people will always be in Vegas."

But high-end customers are visiting less frequently and asking more questions when they do, particularly about big-ticket bottle service.

"It's affecting everybody, from the multimillionaire to the middle class," Schwartz said.

The first quarter of 2009 looks bleak, according to a widely used survey of tourism professionals. About 91% of Canadian, 100% of Mexican and 70% of British respondents said bookings were at least slightly down. German bookings rose, but experts said German tourists tended to plan trips further ahead.

Even more worrisome: Ipsos, a market research firm, recently surveyed thousands of people from 22 countries, including China, South Korea and Japan. Fewer than half of Chinese respondents described their economy as very or somewhat good -- down from about 90% in April 2007 -- and 80% had pared back spending. About 73% of all international respondents said they were curtailing vacations.

The effect is notable in Las Vegas at Asian restaurants across the price spectrum.

A manager at Banana Leaf, a casual Chinese eatery at the Riviera Hotel and Casino, said New Year's business was off 40%. About a third of customers are from China and Hong Kong.

At Joyful House, tables used to turn over at least four times during dinner. Now twice is the norm.

Diners fill out cards saying what company they work for and what convention they are attending. Companies that once flew in 20 people now send maybe eight, and the smaller groups have scaled back on pricey live lobster and crab.

"Everybody says we just have to get through this year," said Ma, the manager. "We don't know what will happen, but we're hopeful."

Last summer, the Las Vegas Convention and Visitors Authority bumped its number of foreign offices from eight to 12 and expanded how many countries it targets. Its message is tweaked by region; some areas were only recently introduced to the marketing slogan "What happens in Vegas, stays in Vegas."

With the dollar strengthening and the credit crunch going global, "we're looking for bright spots around the world," said John Bischoff, the authority's vice president of international brand strategy.

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