VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
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COVER STORY ANNUAL VISITOR VOLUME TO SOUTHERN NEVADA 2007 39.2M 2009 36.4M 2012 PROJECTED 40M The Las Vegas-based gaming operations headed by Sheldon Adelson and Steve Wynn earn about 75 cents of every dollar of their revenue from their Asian investments. Nevertheless, annual visitor volume to Southern Nevada could break 40 million for the first time, a significant figure given that visitation had fallen from 39.2 million in 2007 to 36.4 million in 2009. The rebound has helped push up hotel room and occupancy rates as well as convention attendance and entertainment spending. Yet when casino-related financial figures for 2011 are released later this year, they're expected to show that gross gaming revenues along the Strip decreased significantly from their 2007 high of $6.83 billion. That development is prompting a collection of financial and economic analysts to note that the nature of the Las Vegas gaming market has changed. "Today's visitors look a little bit different than the ones we saw in 2007," said economist Stephen Brown, director of UNLV's Center for Business and Economic Research, explaining that Southern Nevada tourists are staying longer while gambling less. Spectrum Gaming's Pollock eyes the changing landscape and sees a hub-and- spoke feeder network of visitors reminiscent of the strategy employed by the U.S. airline industry, which is itself under great economic pressure. Much like the airline industry has primary and secondary markets that feed off one another, Pollock argues that global gaming and regional markets have increasingly come to coexist. "You certainly can have multiple hubs and multiple spokes. Just look to the deep demographics in Asia and the money those demographics have to spend," Pollock said. "Ultimately, that creates new markets that Las Vegas can exploit." He notes that the hub-and-spoke concept is employed internationally by MGM Resorts International, Wynn Resorts and Las Vegas Sands, which shuttle customers between their Asian and Southern Nevada properties. "The Las Vegas operators that have positions in other parts of the world have opportunities to market all of their properties, all of their offerings to the 16 demographic," Pollock said. "The success of one hub versus another does not mean that Las Vegas has lost its place in the gaming universe." One top Las Vegas casino industry executive isn't so certain. He worries that the recent and future spread of Las Vegas-style hotel-casino resorts to Asia, South Florida and the Northeastern United States will significantly reduce the number and volume of trade shows, conventions and leisure travelers coming here. "You could make the argument that these feeder markets are nice introductory operations, but they do absorb disposable income," said the executive, who requested anonymity, not wanting to anger his competitors. "I do believe that the Miamis, the Chicagos, the Kentuckys, Texases and Louisianas, as well as Massachusetts — places where they're building major resorts — are at the center of a real big story, even bigger than the competition from Macau. It's one thing to build riverboats with 1,000 slot machines, but this next wave of expansion could really hurt us." The executive looks to Florida, where Wynn, Adelson and Malaysian-based Genting USA Limited are pushing state legislation that could lead to the licensing of three Las Vegas-style megaresorts in and around Miami. A top Genting executive has boasted that Wall Street-financed casinos in the balmy, Gulf Coast setting could pull $1 billion to $2 billion annually from the Las Vegas Strip gaming market. Spectrum Gaming's Pollock believes that estimate is overblown, but the anonymity-seeking casino executive said that while the estimated revenue picture is open for debate, the competitive impact of Miami- area casinos is not. "The next big drain on us," he said, "is when they go to Miami and build a category killer in that market. You add fresh convention- and meeting- space hubs, all based on Adelson's Venetian model, and that becomes the newest challenge to the Strip. I think that's the story for this year and the next five years. That's what is keeping us alive right now, the recovery of those meetings and conventions, which have come roaring back in Las Vegas. But what if that subsides in the future? That's what I'm most worried about. That's | 16 JANUARY 2012 |