There seems to be parallel realities in Vegas right now. On the one hand, for tourists, things seem almost eerily normal. In fact, better than normal. Room rates have dropped so low that you can find stays at Strip resorts cheaper than budget motels on lonely highways — with show tickets, gambling coupons, and/or a food credit tossed in for good measure.
Certainly, some shows are closing: “Stomp Out Loud” announced its demise as a going concern at Planet Hollywood come January. They hope to find another theater. And many smaller shows have not weathered the economic downturn. One show at the V theater at Planet Hollywood was closed within a week of opening. But other shows quickly take their place, and so no showroom remains empty for long.
In short, Vegas remains much the same place: full of conspicuous consumption, parties every night and carefree fun for all (or those with enough cash). This weekend, the ticket to have is the Madonna concerts at MGM. The top ticket price is a not very budget-conscious — $375. In short: There have been a few issues that noticeably affect the tourists in Vegas.
Meanwhile, in the parallel world, the last few months, weeks and even days have been among the most difficult that Las Vegas locals have seen for our economy. Strip revenues and visitor counts have been dropping for more than eight months. The result is now coming into full view almost by the day.
Vegas lacks a Plan B that posits an area without ever-increasing growth. We need more people always coming to exist. Things don’t have to drop for Vegas to feel pain. Here is why: New tourists are needed to fill all the new resorts opening — M, Aliante Station, Encore, City Center (with six towers), Fontainebleau and even the new tower at Caesars. Meanwhile, near the Strip are the recently opened Palms Place and Trump. I am leaving out MGM’s Signature and others. But the point is clear: Even if the number of tourists simply doesn’t rise, everyone in Vegas knows bad times are ahead.
From the big gambling companies to the individual employees who live off shifts and tips, these are dark days. All of the major Strip resorts have already done some layoffs (except Wynn, which has to staff its new Encore) on account of the economy. In addition, many workers remaining have seen their hours cut substantially. Almost every local business depends on the casinos in some way. Both of our local newspapers have reported staff cutting at their competitor’s parent company. You know that story.
This is on top of Vegas already being ground zero of the foreclosure crisis. As Buffet readers know, I bought my own condominium in February 2007. The other night I walked through my complex and counted eight moving vehicles. Of the owners of the two other units in my building, one has already moved out of state. A renter has moved into the unit. The owners told me before they left that the rent is less than their mortgage but it will allow them to wait out the economy.
A short tour of the agony of the big companies include MGM-Mirage having issues funding the final phase of their gigantic City Center and the Las Vegas Sands (owner of Venetian and Palazzo) admitting they may default on debt. Meanwhile, the malls attached to both the Venetian and the Palazzo are for sale as the parent company teeters with financial issues. Fontainebleau has not opened yet but Moody’s just downgraded its debt. Harrah’s has just announced quarterly losses. The Tropicana is in bankruptcy, and I have not even gotten to the Cosmopolitan, where the developer lost the project to bankers months ago. So, behind most smiles in Vegas these days there is a lot of anxiety. Yet, those with jobs are extra grateful to still be standing, and with fewer customers to serve, I’ve actually noticed an improvement in customer service in my travels on the Strip. Of course, eventually tourists are going to notice. The Riviera, for example, announced it is taking a year off from the badly needed renovation of the property to save money.
So, the one sure thing is that the future guarantees some amazing deals for tourists (and, with gas prices down, why are you reading this in California?). But for locals this is a harrowing economic time, no matter if you are a big player such as Steve Wynn about to open a new casino (Encore) or just a front-line worker hoping to keep working 40 hours.
Vegas only knows how to grow and we are still growing, but no one knows if all those rooms will attract people as has always been true in years past. As elsewhere, these are interesting times and even in a fantasy city such as Vegas it turns out reality exists.