Survey says recession’s worst has passed for Las Vegas

Man, this economic forecasting stuff is hard.

Throw out any new retail sales report, some new consumer confidence numbers or an iffy study on the housing market’s recovery, and there goes every projection you’ve made on where the business climate is headed.

For an idea of just how movable a target economic prognostications can be, consider Ty Weinert and her Potato Valley Cafe.

Weinert filled out the Review-Journal’s online business survey on Jan. 3, with all the hopes and expectations of the New Year coloring her bright outlook. Spending usually picks up once people pay off the credit cards that financed holiday spending, and the bidding process for the bankrupt and stalled Fontainebleau on the Strip was closing in on a finalist. Maybe, Weinert thought, people will grow confident enough to shell out $6 or $7 for her downtown eatery’s Cuban pork sandwiches and cheese-and-bacon stuffed potatoes. And perhaps completion of the Fontainebleau would give the city’s economic engine a big boost.

But Weinert’s not so confident today. Her customer base continues to dwindle, as the recession begins to result in pay cuts and layoffs among the government workers who make up 60 percent of her business. The 2010 Winter Las Vegas Market, usually a boon to her company, proved a bust, with not a single catering order as of Thursday afternoon (the furniture trade show began Monday and ended Friday at downtown’s World Market Center).

“I was truly being hopeful at the time I filled out the survey,” Weinert said. “But January was definitely worse for us than I thought it would be. Maybe I was just way too optimistic.”

Weinert had good company, though. Nearly 58 percent of the survey’s 100 or so participants said they believe the worst of the recession has passed, while 41 percent said they expected harder times ahead. Nearly half, or 45.8 percent, said they foresee at least a little jump in sales for their company in 2010, while just 27.7 percent plan on no improvements in revenue.

The survey ran from Nov. 22 to Jan. 4.

Political campaign consultant Gary Gray filled out the survey on Jan. 4, and he’s sticking with his initial prediction that the worst is over.

He sees a little less anxiety these days, and less talk about business bankruptcies. But most importantly, his economic barometer — campaign contributions — hints at clearer economic skies.

Donations were down substantially in 2008 and 2009, but contributions overall are up about 20 percent in early 2010 when compared with bleaker days. It’s not an exact measure, because elections in 2009 were more regional, while 2010’s campaigns include nationally watched Senate and gubernatorial races. Still, Gray credits the jump in spending partly to more optimism.

“We’ve started to see an uptick. I wouldn’t call it a wave, but it’s certainly a ripple,” Gray said. “It shows that there’s more money available, that people are once again getting interested, and they’re willing to write a check.”

Nor has Jerome Snyder backed away from his earlier expectations.

Snyder said he expects more hard times for Southern Nevada, especially given the fiscal and economic woes of California, which feeds Las Vegas many of its tourists.

“The occupancy rates at the hotels may be good, but people are not spending, and they’re not gambling,” Snyder said. “To fill rooms with bodies gives a false comfort that things are better.”

Snyder said his businesses should be OK, though. One of his companies, broadband provider KeyOn Communications, should receive stimulus money to help move high-speed Internet service into rural markets. His other enterprise involves marketing a new appetite-control pill, and there’s no shortage of potential patients for the product.

Respondent Mark Brown predicted solid sales growth at Zen Gaming, a company specializing in both Internet poker and live table games inside casinos. Global interest in playing poker on the Web is surging, and big gains in new subscribers mean healthy increases in advertising revenue for his business (Zen has an agreement with the Review-Journal to run the newspaper’s online poker room). Even the table-game side of Zen should do well, because the company’s live poker games allow casinos to deal more hands per hour for more revenue, Brown said.

“I think we’re going to have a tremendous year,” Brown said.

The rest of the Las Vegas Valley might not fare so well, Brown added.

Business inside local resorts should remain depressed in the near term, and thanks to plenty of existing inventory, new residential and commercial building will likely be almost nonexistent at least through early 2011, he said. It’ll be five to 10 years before the market adds another megaresort. That stagnation will yield fewer new jobs, which could translate into fewer new residents.

Plus, get ready for a different attitude among elected officials and business leaders, Brown said.

“In general, whether we’re talking about local government or business, I think we’ve all learned the lesson that we can do more with less, in both capital and human resources,” Brown said. “We’re not going to see the job opportunities that used to exist, even as we begin to pull out of this downturn.”

Still, Las Vegas possesses one of the nation’s most resilient and resourceful business communities, Brown said, so the city will return to growth eventually. Las Vegas remains one of the world’s hottest destinations, and the Strip will always be popular with people looking to part with their discretionary dollars (unless they’re, um, saving for college). It’s just going to take a year or so longer to right the ship.

Weinert isn’t sure she can hold on that long.

She’s already cut hours among her three employees; workers who put in as many as 30 hours a week now get just 20 hours weekly. She froze wages, dropped her food vendor and began buying produce herself and swapped out the foil she used to wrap her goodies in with less-expensive wax paper.

But Potato Valley continues to hemorrhage business.

At the Las Vegas Market, the groups that used to spend up to $2,000 with the eatery to host three-day catered events for clients no longer order in. Orders for delivery to individual attendees have disappeared. Weinert’s holiday catering business fell from six events in 2008 to just one full party in 2009. And customers who have jobs stress over whether they’ll be employed in a month or two, so they’re in no spending mood. Diners who used to come in twice a week stop by maybe twice a month now.

It would take a miracle to see Potato Valley through the recession, Weinert said.

“We’ve been open three years by the grace of God himself, and that’s it. I don’t know what the future holds, and it’s definitely not looking good,” she said. “I’m not sure how long we can last, but we’ll just keep putting our best foot forward.”

Weinert financed Potato Valley’s startup with equity from her home and a business loan from the U.S. Small Business Administration. Today, the business doesn’t turn a profit, and it subsists on income from Weinert’s husband, a union carpenter.

Selling the restaurant to another entrepreneur likely isn’t an option, either. Planned downtown developments such as Symphony Park and a new Las Vegas City Hall aren’t close to opening, and few consumers troll downtown’s streets for fun after 5 p.m. Any potential buyer would need a good 18 months’ worth of cash reserves to stay open through the downturn, Weinert said.

But even Weinert offers a glimpse at the resilience Brown referred to.

“I don’t think people should be discouraged about starting a business. It’s not a horrible time to start a business,” she said. “You can get great rates on rent and great deals with vendors, and you can probably find some good employees. You just have to have the money to weather the storm we’re in.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

ad-high_impact_4
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20 – Tara Mack
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like