Odds are steep, but don't bet against Las Vegas

http://www.businesstimes.com.sg/sub/...87391,00.html?

Published July 12, 2008

Odds are steep, but don't bet against Las Vegas

By LEE U-WEN
CORRESPONDENT


BOARDING a domestic US flight bound for Las Vegas last week, I was stunned to find it little more than half full.

This was a first for me, having visited the gambling hub numerous times before on planes that were always overbooked to the extent that airline staff would ask passengers to voluntarily give up their seats for a later departure.

With most leading airlines having already drastically reduced trips to Las Vegas thanks largely to the soaring cost of jet fuel, I had reckoned that supply and demand dynamics would have naturally resulted in flights being at near-capacity.

How wrong I was.

A sign of the times, perhaps, that how even a city that was once labelled recession-proof is now severely feeling the effects of a slowdown in the US economy.

Credit has dried up. High gas and food prices, declining home values and rising unemployment are forcing many Americans to stay home instead of vacationing elsewhere this summer.

Fewer visitors

An article in a local newspaper also reported how the number of visitors driving in from Southern California - the top source of tourists for Sin City - has dropped by a third compared to last year.

As I strolled along the popular Las Vegas Strip where the major casinos are located, it was not unusual to see card dealers at resorts such as Caesar's Palace waiting for gamblers to play at their table, even during peak hours in the evenings.

Granted the casinos were still relatively crowded, but it was more than likely due to it being the Fourth of July holiday weekend than anything else.

So far this year, visitor numbers to Las Vegas are down compared to 2007. Nevada casinos won just over US$1 billion from gamblers in April, a 5.1 per cent decrease from the same month a year earlier, according to latest figures available from Nevada's Gaming Control Board.

My aunt, a US citizen who migrated to Las Vegas from Malaysia some 30 years ago, described how life has changed for locals in her town of Henderson in the past year. Besides the rising cost of petrol, food and utilities, prices have gone through the roof, she lamented. 'A bag of rice used to cost me just US$7 not too long ago. It's now US$18. Just about everything is going up except my salary.'

Even the small neighbourhood casinos are feeling the pinch as locals tighten their purse strings, she said.

I decided to drop by one such popular casino to have a look after dinner one night. Inside, only a handful of the slot machines were occupied. I also observed a number of croupiers twiddling their thumbs patiently waiting for gamblers to show up.

Still expanding

All things considered, it's perhaps premature to suggest at this point that Las Vegas is in a severe state of decline. After all, it's no secret that the city relies more on foreigners rather than locals to help prop up the economy.

The Las Vegas Convention and Visitors Authority reports that the average foreign visitor spent US$1,200 for purposes other than gambling in 2007, up from US$1,159 in 2006. That compares with average spending of US$701 for all visitors in 2007, down from US$750 the year before.

And despite the gloomy outlook, Las Vegas is still doing what it does best: expand. A staggering US$36 billion worth of new hotel, gambling and housing resorts are now under construction, including a 400m stretch at the centre of the main casino belt.

Las Vegas has beaten the recession odds before. It would be wise not to bet against it doing so yet again.