Get a grip: Stop the hand-wringing

Only in Las Vegas could there be fretting over the fortunes of the city’s biggest industry after a banner year filled with record performances.

But it’s true.

Even though more people visited Las Vegas in 2007 than any year in history there has been a parade of experts who say we may not be as fortunate this year.

It started with Preview Las Vegas, the annual event sponsored by the Las Vegas Chamber of Commerce and the Nevada Development Authority, two organizations notorious for their bullishness on the local market. When Richard Lee, one of the city’s greatest cheerleaders, is downcast and then jokes about it, you know something’s up.

Next came remarks from Deutsche Bank gaming analyst Bill Lerner, a Las Vegas resident who views the community from a front-row seat and reports to his company’s investors whenever there’s any kind of a hiccup in the local economy.

Last week, Lerner told the Reuters Travel and Leisure Summit in Los Angeles that Las Vegas soon will be faced with a problem of too much supply, particularly in the luxury sector.

He said to justify the 42,000 new rooms coming to the city’s resort corridor between now and 2012, revenue at resorts will need to rise by 75 percent. That, he said, would be „difficult to impossible“ because McCarran International Airport is nearing capacity and it’s going to take a long time to fix highway infrastructure problems on the roads between here and Southern California, the city’s largest market.

Also last week, the Las Vegas Convention and Visitors Authority released statistics documenting record visitation (39.2 million people), record average daily room rate (USD 132.09), record occupancy (90.4 percent, a tie with the level achieved in 1996) and the second-best total of conventioneers (6.2 million people). The LVCVA is projecting visitation of 39.8 million in 2008.

January and February statistics will provide interesting reading, since the city saw a slight increase in visitation with a decline in passenger traffic at McCarran in December. A major hotel, Palazzo, opened its doors in January (offset slightly by the three-week closure of Monte Carlo in February) and February (and 2008) has an extra day, courtesy of Leap Year.

It will be tough to beat last February’s colossal numbers, boosted by the city playing host to the National Basketball Association All-Star Game (although the city could get a February bump from this year’s NASCAR race, since fans may start arriving for the UAW-Dodge 400 race on Feb. 29).

More telling may be whether the nation’s economic woes will result in consumers holding down their leisure spending.

Published reports indicate some companies aren’t taking any chances and are gearing for the worst while hoping for the best, freezing employment, trimming hours and even laying off a few people.

The last time Las Vegas weathered an economic slowdown, there were two schools of thought on the resulting effect on the city. One scenario had people reducing all spending, resulting in a domino effect on the local tourism industry.

The other theory held that because consumers believe vacation and leisure time is their birthright that they would simply scale back their plans. Instead of a three-day trip to Las Vegas, they’d take a two-day trip; instead of going to Europe or Asia, where the exchange rate won’t allow tourists to get as much for their dollar, they’ll stay closer to home, which may mean a trip to Vegas instead of overseas.

The dominant theme is that while Las Vegas withstands economic slowdowns better than most cities, it still isn’t immune to the effects of a national recession. Oops, sorry Rossi Ralenkotter – the LVCVA president and chief executive says if we think we’re going into a recession, we’ll find ourselves in one.

You’ve probably heard this one before, but it remains true: Las Vegas has been counted out when gambling was legalized in Atlantic City, when riverboats opened up and down the Mississippi, when Indian gaming arrived in California, and when Macau emerged as Asia’s new Las Vegas. It made it through 9/11, SARS, bird flu and a number of other scares.

Why should the Recession of 2008 be any different?

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