Gaming revenue, visitation and occupancy rates are all in a free fall.
While that’s bad news overall for the casino industry, Las Vegas and Nevada, there’s a bit of good news in there for budget-conscious consumers. Those spiraling numbers are dragging down prices of rooms, food and shows, too.
We’re not back to the $1.99 steak and eggs. Yet.
You’re more likely to find deals such as a prix fixe, multicourse menu in a swank restaurant where your total bill costs what you would have tipped when times were better; $69 rates for a room at Paris Las Vegas; dining and entertainment credits just for staying in certain hotels; all day all-you-can-eat buffets for $20.
When Steve Wynn gives guests $75 just for staying in his luxury hotel, can the cheap Vegas of old be far behind? And are these discounts and deals a harbinger of things to come?
No and maybe, local experts say. Las Vegas can’t really return to the days when food was a loss leader and rooms were cheaper than a large pizza. But discounts should be around for a while, as casinos try to lure visitors to their properties until the economy improves or a Vegas vacation becomes trendy once more.
It may feel like it but this is not the “new normal,” at least in the casino industry, experts say.
“We started seeing the discounting a little over a year ago,” says Anthony Curtis, publisher of the Las Vegas Advisor, a newsletter and Web site devoted to tracking the best deals in town. “It was marginal then but it picked up extraordinary momentum going into the first of the year. It was like everyone was ready to admit there was a problem.”
Some hotel-casinos have offered substantial savings, Curtis notes. In July, lasvegasadvisor.com conducted a room rate survey of 84 hotels and found that 60 of them had rates of less than $50 a night. That includes hotels that used to command triple digit room rates.
But that was before visitor counts took a nosedive. For years, Las Vegas resorts were used to occupancy rates above 90 percent; year-to-date occupancy is 82.7 percent, according to statistics from the Las Vegas Convention and Visitors Authority.
Long known as the home of cheap and cheesy kitsch, casino companies worked hard during the past few years to shed Vegas’ bargain image, remodeling themed hotels into vacation luxury resorts and opening one gourmet restaurant after another. If a property was successful with something, others followed suit. Nightclubs demanding hundreds of dollars for a bottle of booze popped up in every major casino, while hotels turned their pools into dayclubs that charged the equivalent of a mortgage payment just to sit in a cabana.
During flush times, the casino bandwagon trundled along streets paved with gold, but now, thanks to the recession, it looks like the wagon train has veered onto the casino equivalent of Donner Pass. So far this year, gaming wins on the Strip and downtown have fallen nearly 15 percent and 11.1 percent, respectively. The number of conventions is down more than 21 percent, according to the visitors authority.
It follows that discounts would appear everywhere as visitors shop around for value, says gaming historian David G. Schwartz, director of the University of Nevada, Las Vegas Center for Gaming Research.
The hard part for casinos now is to attract people and also make money, he adds.
The old Vegas would practically give everything away — food, rooms, drinks, shows — so long as people came and gambled. The present-day Las Vegas is not just a gambling destination, though, Curtis says.
When a recession hit the nation during the early 1980s, Las Vegas did OK because “most everything was a loss leader,” Curtis says. “Vegas was sort of a pure gambling city then and gambling was always fairly recession resistant. When it became an upscale vacation destination, that’s when it hurt.”
Casino companies, now consolidated into a handful of major players, also have increased their debt loads in recent years as they rushed to remodel their properties and add high-end retailers and gourmet restaurants. So they don’t have the wiggle room to cut prices too steep for too long as they may have done in the past, Schwartz says. Food can’t be a loss leader; the quality has become too high and celebrity chef-owners of those gourmet restaurants probably won’t want to dilute their brands by associating them with cheap food.
Throughout Las Vegas’ modern history, casino companies prospered by copying each other. They all had their $4.99 prime rib in the ’80s and ’90s. After the ’80s recession, casinos adopted the downtown model with an emphasis on slot machines, Schwartz says. Companies embraced the themed casino strategy and then followed the vacation luxury resort trend.
What new trend will emerge to lead casinos out of the recession? No one knows, Schwartz says. It will have to be new and innovative enough that people will want to spend their money on it.
“It’s not as simple as reducing room rates,” Schwartz says. “I think the key is making Las Vegas into a value instead of just making it less expensive. That will be key for the convention market, which is off, too. There has to be a value there; people have to get something for their money.”
A relatively new and innovative idea for the local casino industry is the all-day buffet, Curtis says. For a flat fee, you can eat as much as you want at breakfast, lunch and dinner. It must be successful, he says, because one casino after another has added this option recently.
Excalibur started the latest trend about six months ago. MGM Grand copied the idea because it had potential, says David McIntyre, the hotel’s vice president of food and beverage.
“It’s been very, very, very successful,” McIntyre says.
Yes, that’s a lot of verys and they’re well-deserved. So far in 2009, the buffet has done 72,000 more covers than during the same time period last year, he says.
Their research shows that the majority of people eat at the buffet two times a day. The hotel also has added early bird prices for breakfast and dinner.
All of this is a response to the customer, McIntyre says, who is more value-conscious than ever before.
Contact reporter Sonya Padgett at spadgett @reviewjournal.com or 702-380-4564.