Resort openings anchor hopes for better economy

Admit it, you were among the thousands of Southern Nevadans who turned the calendar to 2009 with gusto.

Most of us couldn’t wait to leave 2008 and its pessimistic headlines in the dust.

Downturns in visitor volume, hotel occupancy, average daily room rates, airline capacity and gross gaming revenue – it was all so depressing.

Although there are still pessimists out there who expect 2009 won’t be any better than 2008 – or possibly worse – there are a few rays of hope things could get better in tourism.

One of the most significant stories of 2009 will be the next wave of resort openings, a far bigger blast than what we had in 2008. The highlight, of course, will be MGM Mirage’s CityCenter, coming at the end of the year. The USD 9.2 billion project represents the addition of more than 6,000 hotel rooms and residential units.

But there are other projects due to open that will make 2009 the biggest boom period in the city’s history.

The parade starts in March with Anthony Marnell III‘s M Resort at St. Rose Parkway and Las Vegas Boulevard South. The USD 1 billion project will add 390 rooms.

A new tower at Caesars Palace is expected to open in the middle of the year. The USD 1.3 billion project will add 665 rooms and raise Caesars‘ capacity to about 4,000 rooms, bumping it into the top five largest properties in Southern Nevada.

In August, Planet Hollywood is due to open its Planet Hollywood Towers by Westgate, a USD 1.2 billion project that will put an additional 1,228 time-share units on the Strip.

The USD 760 million Hard Rock Hotel expansion in September will beef up that property by 875 rooms, and downtown’s Golden Nugget should complete its USD 150 million addition that would add 500 rooms by the end of the year.

The opening of CityCenter with its Aria, Mandarin Oriental, Harmon and Vdara properties plus the two Veer condo towers should be one of the biggest events of the year. Next week, MGM Mirage will start hiring 12,000 employees, which has the potential of reversing unemployment trends and jump-starting the local housing industry.

Representatives of Fontainebleau, the nearly 4,000-unit, USD 2.9 billion project being built on the Strip, say construction is on schedule for a late 2009 opening.

Add in a number of smaller suite hotels being built across the valley – the Cabana, Staybridge, TownePlace, Holiday Inn, Comfort Inn, Hampton Inn, three SpringHill properties and the boutique Indigo – and Southern Nevada will have nearly 14,000 new hotel rooms in the inventory with investment totaling more than USD 16.5 billion. That’s quite a leap from the 8,600 rooms that came on line in 2008 worth an estimated USD 6.6 billion.

Sometime in 2009 we may learn more about the fate of Boyd Gaming’s Echelon. Construction was shut down in August, and Wall Street applauded the decision, concurring it was wise to wait for the market to correct before pressing on with the USD 4.8 billion project that would add about 5,000 rooms by late 2011 under current scenarios.

But back to 2009. The question becomes: Will tourists come?

That’s what has occurred traditionally when new resorts open their doors. But it’s been pointed out over and over that 2008 and the economic climate was far from traditional.

Lower gasoline prices toward the end of last year certainly provided some optimism that the drive-in market could get stronger. But forces already are at work to increase the cost of oil. How successful those efforts are should determine how strong the drive market will be and if Californians are willing to see the new resorts or be content to stay close to home at tribal casinos.

The fly-in market is another story.

Capacity at McCarran International Airport was down about 15 percent in 2008, which makes the decline in passenger volume of 7 percent a little easier to comprehend.

Will capacity come back at McCarran? Most aviation experts are skeptical, noting that the airline industry is having as difficult a time as ever because consumers have stopped flying as much.

Some of the stories that should have an effect on aviation in 2009 involve McCarran’s big carriers. Will US Airways, which cut its Las Vegas capacity by about half in 2008, come back? Most experts are saying no, it won’t.

How about Southwest Airlines? It made some minor capacity cuts at McCarran. Going forward, there could be some optimism because Southwest will enter a new major market, Minneapolis-St. Paul, in March and New York’s LaGuardia International Airport later in the year. At the end of 2008, Southwest Chief Executive Gary Kelly said there are „decent odds“ Southwest would add another major airport destination in 2009. How that would play out for Las Vegas is an unknown.

But Southwest also should make some headway in 2009 with its two announced code-share agreements with Canada’s WestJet and Mexico’s Volaris, moves that could boost international traffic to the local airport.

WestJet, in fact, has been one of McCarran’s bright spots in 2008 with 57 flights a week between Las Vegas and eight Canadian destinations added in the last 12 months.

Another airline that has Las Vegas‘ best interests in mind is locally based Allegiant Air, which has seen passenger volume increase despite fewer flights into the local market. The story to watch in 2009 is whether the airline’s growth will be heavier in some of the other resort communities the airline has chosen to serve in addition to Las Vegas.

Other aviation questions that could become stories in 2009 involve the consolidation of the industry. What effect will the merger of Northwest and Delta have on Las Vegas? Will the new Delta continue to use some of its large aircraft at McCarran, thus bringing more seats into the market?

And what about United? The No. 3 operator at McCarran has run a pretty lean operation in Las Vegas. Will that change? Would the airline move on a merger with Continental Airlines, a rumor that never seems to go away?

Will some of the other popular airlines in the market – AirTran, JetBlue and Virgin America come to mind – boost their Las Vegas presence when the new resorts open their doors?

What will happen on the international front? Las Vegas will lose its second European connection in just over a year in April when bmi pulls the plug on its Manchester-Las Vegas nonstop flights. Would Virgin Atlantic step up and add more flights to and from London? Would British Airways be interested in serving Las Vegas? And what’s the status of Korean Air, Las Vegas‘ nonstop connection to Asia? The airline went on an unexpected three-month seasonal hiatus in 2008. Is demand strong enough to continue its route between Las Vegas and Seoul?

Another aviation story that should get some play in 2009 is Boeing’s development of its 787 Dreamliner. Multiple delays have plagued the debut of the plane, which is being manufactured out of composite materials instead of metal. The plane, which will be lighter, more fuel-efficient and have a greater range than most jets flying today, has the potential of greatly improving the aviation landscape since larger planes will be able deliver more passengers from greater distances. That won’t happen this year, but the first flight should occur in 2009 and the boost it should provide will be an important landmark.

And speaking of psychological boosts, experts are saying the statistical reports in the tourism industry for 2009 should show some improvement, if only because passenger counts, visitor volume and gaming revenue will be compared with 2008’s awful numbers. Even if the 2009 numbers are flat, it would be a welcome change from the double-digit decreases we saw in 2008.

But if the double-digit increases continue, watch out. That means that all the optimism some of us have had for the new year will go down the drain and we’ll have to wait for 2010 for any good news.

Hawaiian boost

The Hawaiian market has always been strong for Las Vegas and Honolulu-based Hawaiian Airlines will capitalize on that once again next month when it introduces a new four-times-a-week nonstop round trip between Honolulu and McCarran.

The new flights will be offered Mondays, Wednesdays, Thursdays and Fridays beginning Feb. 23.

The airline is expected to use a Boeing 767 on the route at least until the company acquires three new 298-seat Airbus A330-200 twin-engine jets in 2010. Hawaiian announced in November it was acquiring three of the Airbus jumbo jets in addition to 24 other aircraft announced in February from the European manufacturer.

Hawaiian also announced it would acquire six Airbus A350 jets with options for six more with the first delivery expected in 2017.

WestJet expansion

Calgary, Alberta-based WestJet is adding four cities to its network in May and June.

Although there won’t be any nonstop flights from McCarran, local passengers should be able to connect to the Canadian seasonal markets the airline is introducing in May. The airline will begin flights between Edmonton, Alberta, and Yellowknife, Northwest Territories, on May 4 and between Toronto and Sydney, Nova Scotia, on May 5.

WestJet also will offer flights between Calgary and San Diego on June 1 and Calgary and San Francisco on June 2.