Las Vegas Economic Woes May Be Due to Deemphasizing Gambling
Reprinted from the Online Casino Advisory, found here.
Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.
Casino stocks continue to fade as major companies have seen their value plummet to a quarter of their worth less than a year ago, and gambling industry analysts remark that the recession-proof expectations of the past no longer exist. The question is, why did the casino business become responsive to economic downturns?
William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, has an idea. Eadington points out that in 1990, 42 percent of revenue for Las Vegas Strip casinos came from non-gambling sources, such as room rates, restaurants, and retail rentals.
In 2007, that number for non-gambling revenue had increased to 59 percent. A conscious decision had been made over the last twenty years that Vegas resorts were going to feature many forms of entertainment; gambling would no longer be the ultimate reason to visit Las Vegas.
Shows and buffets had always existed, but mainly as lures to draw gamblers. Now the collective strategy of the Strip hotels became to offer complete vacations, pulling tourists who had only marginal interest in gambling.
And the new features were each designed to be money-makers. Two-hundred dollar meals became common among upscale casino restaurants, showcasing the nation's finest chefs. Clubs at Caesars and the Palms were soon the hottest tickets in the country, with long lines willing to pay exorbitant cover charges and outrageous drink prices to stand near celebrities famous only for being famous.
Rooms were decked out in cutting-edge decor and electronics, as it became fashionable to stay at the resorts that ran the most ridiculous rates, and mini-bars and snack centers sold Diet Cokes and Snickers bars for ten dollars each in the convenience of your room.
In other words, Las Vegas became a town that no longer comped and tempted its clientele to come gamble, but a place that sold everything it could find, one part of which happened to encompass wagering.
So, it may be seen that, among other factors including the prohibitive prices paid to build these all-encompassing mega-resorts, a major reason that the casino industry is suffering badly through the current economic storm is that it no longer is the casino industry.
Instead, Las Vegas has become the entertainment industry; and no one ever claimed that restaurants, clubs, upscale retail outlets, and swanky hotels were recession-proof. Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.
According to Sherman Bradley, gaming analyst at OCA, "This is not to say all the flash and glitz must go, but that, if casino managers want an industry unaffected by downturns and recessions, the sparkle must resume its proper place, as a draw for gamblers. Comps and freebies must be brought back en masse, and luxuries and status items should be used as enticements, not revenue generators.
"If the non-gambling services and products cover their own cost, that would be sufficient. Then gamblers would fill the rooms in their rush to play in conditions far beyond what the local slot parlor or Indian casino could offer. Once again, Las Vegas would see revenue going only upwards.
"Las Vegas has reacted poorly to the spread of gambling venues across the country. Instead of pushing their casinos as the greatest gaming spots around, they have tried to diversify, and the result was finding themselves in businesses that do follow economic trends."
Published on August 3, 2008 by Joshua McCarthy
Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.
Casino stocks continue to fade as major companies have seen their value plummet to a quarter of their worth less than a year ago, and gambling industry analysts remark that the recession-proof expectations of the past no longer exist. The question is, why did the casino business become responsive to economic downturns?
William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, has an idea. Eadington points out that in 1990, 42 percent of revenue for Las Vegas Strip casinos came from non-gambling sources, such as room rates, restaurants, and retail rentals.
In 2007, that number for non-gambling revenue had increased to 59 percent. A conscious decision had been made over the last twenty years that Vegas resorts were going to feature many forms of entertainment; gambling would no longer be the ultimate reason to visit Las Vegas.
Shows and buffets had always existed, but mainly as lures to draw gamblers. Now the collective strategy of the Strip hotels became to offer complete vacations, pulling tourists who had only marginal interest in gambling.
And the new features were each designed to be money-makers. Two-hundred dollar meals became common among upscale casino restaurants, showcasing the nation's finest chefs. Clubs at Caesars and the Palms were soon the hottest tickets in the country, with long lines willing to pay exorbitant cover charges and outrageous drink prices to stand near celebrities famous only for being famous.
Rooms were decked out in cutting-edge decor and electronics, as it became fashionable to stay at the resorts that ran the most ridiculous rates, and mini-bars and snack centers sold Diet Cokes and Snickers bars for ten dollars each in the convenience of your room.
In other words, Las Vegas became a town that no longer comped and tempted its clientele to come gamble, but a place that sold everything it could find, one part of which happened to encompass wagering.
So, it may be seen that, among other factors including the prohibitive prices paid to build these all-encompassing mega-resorts, a major reason that the casino industry is suffering badly through the current economic storm is that it no longer is the casino industry.
Instead, Las Vegas has become the entertainment industry; and no one ever claimed that restaurants, clubs, upscale retail outlets, and swanky hotels were recession-proof. Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.
According to Sherman Bradley, gaming analyst at OCA, "This is not to say all the flash and glitz must go, but that, if casino managers want an industry unaffected by downturns and recessions, the sparkle must resume its proper place, as a draw for gamblers. Comps and freebies must be brought back en masse, and luxuries and status items should be used as enticements, not revenue generators.
"If the non-gambling services and products cover their own cost, that would be sufficient. Then gamblers would fill the rooms in their rush to play in conditions far beyond what the local slot parlor or Indian casino could offer. Once again, Las Vegas would see revenue going only upwards.
"Las Vegas has reacted poorly to the spread of gambling venues across the country. Instead of pushing their casinos as the greatest gaming spots around, they have tried to diversify, and the result was finding themselves in businesses that do follow economic trends."
Published on August 3, 2008 by Joshua McCarthy
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