Boom over for Las Vegas?

I read this article a few minutes ago and thought some may find it interesting.

http://finance.yahoo.com/news/Analyst-says-boom-is-over-for-apf-3219069549.html?x=0&.v=1

Time will tell but it doesn't look very rosy for the foreseeable future.

I think that over time Vegas will come back and be strong again, but it is probably going to be quite awhile. It may not look like the Vegas of the past 10 years or so.

Your article along with this article from today's LV Sun, speaking about continued foreclosures are a hint that boom may have gone bust for now.

Here's another headline from the LV Sun indicating the continuing problems Vegas is facing. McCarran passenger count falls for 16th month --- In other words, no tourists --- no boom.

I wonder how prices are holding up on holiday season penthouse timeshare units?

Saying that it will take three years or so to get back to the same level of profitability in 2008 is hardly a bold prediction. You can say the same thing about apartments in Phoenix or offices in New York City. The one thing Vegas has going for it is that it is not a market in secular decline, say like Detroit or Cleveland. Its a boom and bust kind of place and it will be until the Nevada desert runs out of sand.

I don't disagree that there will more more competition for the gaming dollar in coming years and that Vegas will have to work harder to earn that dollar than they have in the past. Atlantic City is a lesson on complacency in the face of competition.

But don't put too much stock into his forecasts. This guys was probably like all the other baboons who were forecasting 10% per year growth in Vegas casinos ad infinitum. I am sure he even boldly changed his rating on gaming companies to 'sell' after they had already fallen 50%.

Two of our local casino/resorts, Pala and Harrah's Rincon, in San Diego county are both hiring right now. They are both running "help wanted" ads for several different positions.

Even the car rental rates are down. I just rebooked a car for Sept., and the rate had dropped quite a bit.

Airline passenger count lower everywhere, not just Las Vegas

http://www.bizjournals.com/dayton/stories/2009/02/09/daily27.html

Very Interesting Article in the WSJ and a followup

The following article was in the Wall Street Journal today.

http://online.wsj.com/article/SB124804383363363397.html#articleTabs_slideshow

The following is a followup article to it:

http://seekingalpha.com/article/150109-boomtown-to-bust-las-vegas-s-american-story?source=yahoo

Thanks John

The WSJ article that is linked is in my opinion an excellent analysis of the problems that Vegas is facing now and the problems that it will continue to face for quite some time.

My company postponed their huge national convention this year in Vegas. They said it did not look right to go and have a company celebration during these economic times. We just heard that it has been rescheduled for next year. We take a large number of rooms at MGM, Paris, and Belagio and it lasts for 4 days per session and they have 2 sessions since there are so many people. I would think most large corporations did the same thing. I can not imagine any automaker, bank, insurance company is going to have a large meeting there this year.

even found an article on it (who knew): http://www.nytimes.com/2009/02/15/us/15vegas.html

Not really feeling that bad about it. Pretty much everything they are talking about now:
- unemployment
- foreclosures
- income
- housing/hotel/show prices

is probably the inverse of what's been going on 2-7 years ago. Think back to ~2000:

- how much were salaries (for 'blue collar' employees rising)
- how much new housing was being built
- how many people were moving to Vegas
- how many casinos, condos, timeshares, shopping centers were being built.

It just COULDN'T continue. Granted, it wasn't all Vegas's fault. Vegas is great when people have money to gamble and vacation with; Detroit is great when people are buying US-made cars; Florida & Houston were probably great during the space race. But if you're not diversified, and there's an impact with those areas, it can be a hard fall.

I live in Philadelphia. Supposedly our unemployment isn't too bad, and our foreclosure rate is pretty good. Why? Because we never had that huge spike that other areas had. We didn't have condo's charging $1000/sqft like Vegas did. If you don't rise as high, you don't fall as much.

As the beginning of the article says, "A big house in a swanky suburb, a backyard hot tub, and a $100,000 deposit on a new condo with views of the Las Vegas Strip and 24-hour concierge service. They did it all on the salaries of a construction-equipment salesman and a cocktail waitress who brought in $1,000 a week in tips alone...." You're not going to be able to do that in Camdem, or Memphis, or Oklahoma City, or Sioux Falls.

How many people came to Vegas looking for 'the life we probably can't have anywhere else?' Those that did, likely made more money than they would elsewhere. Now they're also losing more moeny than they would elsewhere. Overall, it probably balances out.
Does that make it any better for those losing their jobs or houses, probably not.

Jeff

Just returned from Vegas last nite. We were told business is down 40%.

While vacationing this year on Kauai, I met a young couple from Vegas who were there for their first time. After answering their basic questions about where to go for what and all, we discusses Vegas a bit. Their take was that its cycle was a bit different than others and they felt it had bottomed out and had started back. She worked in a casino, he in construction, so they had been hit pretty hard. The guy thought the Indian Casinos in particular in neighboring states had a pretty big negative impact.
It was just interesting to hear from those directly impacted.


Marty

Kona Lovers said:

...The guy thought the Indian Casinos in particular in neighboring states had a pretty big negative impact.
It was just interesting to hear from those directly impacted.Marty

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That is very true. I was talking to my Executive Casino Host at Harrah's Rincon casino/resort in San Diego County, CA two days ago. We are pretty good friends as well. He told me that Harrah's Rincon has higher earnings/revenues than any of the Harrah's properties in Las Vegas. The California casinos have the biggest impact because there are so many casinos in California now and many of them are full blown resorts with all the amenities and are larger than the ones in Las Vegas.

I meet people all the time at our local Harrah's Rincon casino/resorts that are coming in from other states and staying there.

As soon as the Indian casinos in Ca .. get real craps, I won't need to go to Vegas anymore

CaliDave said:

As soon as the Indian casinos in Ca .. get real craps, I won't need to go to Vegas anymore

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For your sake, hopefully that will happen though I wouldn't count on it. I haven't heard anybody asking for it except for you. I don't play craps so it doesn't affect me. I think it is ridiculous for the state to not allow any games that use dice.

It seems to me that the corporate consensus is to push table game players like craps and roulette to the back of the priority list. On the Strip all of the boxmen have been fired leaving only three dealers to run the crap table. This places the customer at a disadvantage because the boxmen made sure the payouts were correct and they kept the game moving. Additionally, the pit bosses were stripped of any real ability to grant customers comps. All comps are run through a computerized system of time and play management. Some comps are granted by "casino hosts" but still based on the computerized system.

After recently visiting casinos in Chicago the boxmen are still employed and it's business as usual. I'm not sure why there is a problem with approving craps or roulette in CA. In Wisconsin, it took the Indians about ten years to finally get approval for craps.

In Las Vegas floor space for slots has expanded greatly. I believe that some of the problem is that Las Vegas casino operators would rather have slots than some of the table games. After all, you don't have to provide health insurance and pension benefits for a slot machine. And they always show up for work on time.

kjd said:

I'm not sure why there is a problem with approving craps or roulette in CA. In Wisconsin, it took the Indians about ten years to finally get approval for craps.

In Las Vegas floor space for slots has expanded greatly. I believe that some of the problem is that Las Vegas casino operators would rather have slots than some of the table games. After all, you don't have to provide health insurance and pension benefits for a slot machine. And they always show up for work on time.

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It is not the game of Craps that is prohibited in California. It is any game that uses dice that are prohibited. Many of the California casinos have a version of Craps that doesn't use dice.

Cost of labor has nothing to do with slots vs table games. The casinos will balance it with what the public demands. Many of our California casinos have expanded the number of table games greatly due to demand. Many of the casinos have at least 75-100 table games. The table games also attract customers to play the slots as often a husband or wife will play slots while the other one plays the tables.

John Cummings said:

It is not the game of Craps that is prohibited in California. It is any game that uses dice that are prohibited. Many of the California casinos have a version of Craps that doesn't use dice.

Cost of labor has nothing to do with slots vs table games. The casinos will balance it with what the public demands. Many of our California casinos have expanded the number of table games greatly due to demand. Many of the casinos have at least 75-100 table games. The table games also attract customers to play the slots as often a husband or wife will play slots while the other one plays the tables.

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Come to think of it, do the Indian casinos in Cali have Roulette? Odds for Roulette, unlike Craps, are definitely in the casinos favor by a large margin. It seems as if I see a younger crowd playing craps.. and maybe they tend to visit Vegas more than they would an Indian Casino.
Not sure, just a thought. Never actually been to an Indian Casio at night..
I went to one in Rancho Mirage during the week one day , just stopped in. I was surprised that duing the week, midday.. the table games were expensive. $15 blackjack, and $10 3 card poker. I was expecting to see it in the $5.00 range.
Also, I was very surprised that you are charged for drinks while playing.
Guess I'm used to Vegas

CaliDave said:

Come to think of it, do the Indian casinos in Cali have Roulette? Odds for Roulette, unlike Craps, are definitely in the casinos favor by a large margin. It seems as if I see a younger crowd playing craps.. and maybe they tend to visit Vegas more than they would an Indian Casino.
Not sure, just a thought. Never actually been to an Indian Casio at night..
I went to one in Rancho Mirage during the week one day , just stopped in. I was surprised that duing the week, midday.. the table games were expensive. $15 blackjack, and $10 3 card poker. I was expecting to see it in the $5.00 range.
Also, I was very surprised that you are charged for drinks while playing.
Guess I'm used to Vegas

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Yes, they do have Roulette. Like I said it is just the games that use dice that are prohibited. There are lots of younger people at the casinos. The big difference in the clientèle is the California casinos don't get the looky loos or young crowd that just goes to drink except those that go to the clubs in the casinos. They go to play at the California casinos, not loiter around. You have a lot more serious players at the California casinos. Our local Harrah's Rincon has far more Diamond and Seven Star players than any other Harrah's property. A Diamond Card player has to cycle through at least $55,000 ( $110,000 if playing Video poker ) per year. A Seven Star player has to cycle through 10 times that amount. That is the reason why the revenues/earnings for many of the California Casinos are higher than those in Las Vegas.

You must have gone to the Agua Caliente Casino in Rancho Mirage. They have expanded and added a new hotel. You will see an older crowd in the Palm Springs area, especially during the day.

The reason that the Indian Casinos do not give free alcoholic drinks is because of the California State law that prohibits any bar, restaurant, etc. from giving free drinks. We don't drink adult beverages at all so I am very happy that they don't have free alcoholic drinks. They do give free non-alcoholic drinks.

We have been to all 20 or so Indian casinos in Southern California, another 20 in Central and Northern California, and another 70 or so in Nevada, other states, and countries. I am a Diamond Card player at Harrah's and the equivalent at several others in California and Nevada.

The largest Indian Casino in California currently is Pechanga in Temecula which is about 15 minutes from my house. Pechanga is a full blown casino resort with Hotel, beautiful theater, 8 restaurants, buffet, store, gas station, etc. Pechanga has 4,900 slot machines and 212 table games.

Here is the description of California craps played at Pechanga, and many other casinos:

"Pechanga Craps

Just like craps with a twist! Two regular playing cards, numbered one through six are used to determine the "roll." Otherwise, it’s business as usual at the world’s fastest gambling game. Make a Pass Line bet and win with a 7 or 11 on the come-out "roll" – 2, 3 or 12 (Craps) will lose. Any other number (4, 5, 6, 8, 9,10) becomes your "point". Repeat your point number before you roll a seven to win your Pass Line bet."

I played that same craps card game at the Ho-Chunk casino in the Wisconsin Dells before they were able to get the real thing. It's was a smaller table and was getting practically no action from gamblers. I believe they eventually took it out in order to get more floor space. No serious craps player likes that game.

I don't see a lot of folks playing California craps. I have no interest in playing table games so it is not an issue for me. The rest of the tables are usually very crowded.

The Indian Casinos in WA have all the games but had a problem with the State when using real coin slot machines. These casinos are 80 % slot and 20% gaming tables including craps. We only go for the food and entertaiment and rarely ever play.The same for us at Las Vegas casinos.

There are some real deals on real estate forclosures in LV right now. Just look at the HUD inventory being foreclosed on. Property values have really droped. I wouldn't want to live in LV and didn't think too much of the place on our visits. Its a fun place to party but there are way better places to have fun in my opinion.

easyrider said:

The Indian Casinos in WA have all the games but had a problem with the State when using real coin slot machines.

I wouldn't want to live in LV and didn't think too much of the place on our visits. Its a fun place to party but there are way better places to have fun in my opinion.

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Why would they want to have coin machines? The Indian casinos were the pioneers in ticket machines. I was very happy to see the coin machines disappear everywhere.

Las Vegas is a fun place to visit but I wouldn't to live there for anything.