Las Vegas Economy: Total Train Wreck
The effects of a bad economy are hitting Las Vegas like a multi-pronged attack. As people find their disposable income dwindling, tourism and gambling are at an all time low in Sin City. Casino gambling revenue dropped 15 percent on the Las Vegas Strip in January, and February numbers are not expected to be much better.
Companies with their own mounting financial problems, are canceling events at a record pace. It is estimated that over 340 events have been canceled in the past three months alone, leaving hotels and conference centers empty and losses growing at a record pace.
Although some companies could well afford to have their events in Las Vegas, there is a shadowy perception of corporate waste and greed should they continue with their plans. Some, however, have no choice as they find themselves in their own bankruptcy hell. Just today, Nortel Networks will seek approval from the courts to cancel hotel bookings in Las Vegas for the big CTIA Wireless trade show late this month. It had reserved up to 175 rooms at Caesar's Palace at rates of up to $2,300 U.S. a night. Nortel said it now plans to send 60 to 70 employees to the trade show after its bankruptcy filing. The chosen few that are attending, will be responsible for booking their own accommodation in Las Vegas.
With approximately 236,000 empty rooms and lost revenue, many casinos are having to lay off workers, who are already cash-strapped to pay mortgages on homes that are rapidly declining in value. Home foreclosures in Las Vegas jumped to 3,286 in February, double the amount from the same month a year ago, Foreclosures.com reported Wednesday.
The empty hotel rooms are also draining local State coffers which normally depend on the lodging tax revenue.
The short term future outlook remains somewhat jaded as well. Yesterday, Moody's Investors Service cut some ratings for MGM Mirage and Las Vegas Sands Corp. The ratings agency said the downgrades stem mostly from "aggressive and substantial debt-financed development activity and earnings pressure from slowing consumer spending trends that began in fiscal 2008.
Some financial analyst have hope for a mild recovery in Fall 2009, but the rapidly deteriorating housing market, credit market and jobless rate continues to add pressure.
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Payton O'Brien, Gambling911.com Senior Editor
