Quick Hits: No Honeymoon in Vegas
Brief scrutiny of today's headlines.
Newsweek reports that, according to the Las Vegas Convention and Visitors Authority (LVCVA), the city saw gambling revenues fall 4%, the number of conventions drop 10.4% and average daily room rates slide by 3.8% in the first two months of 2008. March's figures will likely put the year-to-date numbers in negative territory. Adding insult to injury, several major construction projects are delayed due to financing problems, including a second tower for Donald Trump's new condo-hotel.
Meanwhile, the stock price of MGM Mirage (MGM), owner of Bellagio, Mirage and eight other resorts on the Strip, has halved, tumbling from $100.50 in October to about $49. In recent weeks, the company eliminated 440 middle management jobs to save $75 million annually.
For a city infamous for its slot machines, roughly 60% of its revenues are now generated by nongaming activities. By contrast, in 1991 and 1992, when the last comparable slowdown occurred, nongaming activities accounted for just 42% of overall revenue.
Despite problems, some developers are more than willing to bet on the future of Vegas. There's more than $30 billion in new construction scheduled for the Strip. And assuming those projects don't get squeezed by the credit crunch, some 40,000 new hotel rooms will be added to the current 136,000 by 2011. About 100,000 new service sector jobs would be created as a result.
Whatever's going on in Vegas has to be better than what's happening in Atlantic City
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