Can the bright lights of Sin City keep burning through the credit crunch? You can bet on it, says Tom Otley.
Las Vegas is a young city, but it has already been through several image changes, from mafia playground to city of sin, and then, most recently, family-friendly resort. In the past few years, it has partly reverted to type as an adult-entertainment centre, but with the current economic downturn it would seem that the biggest gamblers are the developers.
Las Vegas is going through hard times, although judging by the number of cranes on the horizon, you wouldn’t guess it. Look out onto the fourth-floor pool deck of the Venetian and the view of weekend visitors swimming, sunbathing, drinking and lounging is against the skeleton of yet another new building rising into the desert sky.
The Venetian, and its hotel-within-a-hotel the Venezia at the Venetian, were joined in January by The Palazzo, with more than 3,000 suites, and during the course of this year, around the corner, the Encore Wynn Las Vegas will open along with the Fontainebleau Miami Beach Las Vegas and the Echelon Las Vegas.
Perhaps most impressive of all is CityCentre, a massive development on the 6.4-kilometre long Las Vegas Boulevard South (aka the Strip), which promises a 61-storey, 4,000-room hotel/casino; two 400-room, non-gaming hotels; a 46,000-square-metre retail and entertainment district called The Crystals; and about 2,650 luxury-condominium and hotel-condominium units. There’s obviously no lack of confidence in the future.
In part, this is because of the reputation Las Vegas has gained in recent decades. It has been the biggest boomtown in the US over the last 30 years, and against some pretty stiff competition – consider Phoenix in Arizona, where the population of Greater Phoenix has doubled since 1990. Las Vegas has a population of around two million, twice what it was 10 years ago, and in addition welcomes around 40 million visitors each year.
Fourteen of the world’s 20 biggest hotels are in Vegas, the largest being the MGM Grand with 5,690 rooms. And it’s the owner of that hotel, Kirk Kerkorian, who is behind CityCentre. It hasn’t been without problems, however. A series of profit warnings eventually resulted in Dubai World taking a 50 percent share in the ownership of it for US$2.7 billion, and investing another US$2.4 billion in MGM Mirage stock.
That Dubai World has a hand in the project seems appropriate when you visit the sales office next to the CityCentre construction site. Here you will find full mock-ups of the rooms for each of the separate developments. You can walk into a Mandarin Oriental residence and out of the window see a painted backdrop of the desert.
For a moment, you could be in the Middle East, where such sleights of hand have become commonplace. And the analogy with the Gulf states extends to the use of celebrity architects to market the development – eight companies are involved in the design, including Pelli Clarke Pelli Architects, Daniel Libeskind, Foster and Partners, and Helmut Jahn.
Due to open late next year, on 27ha of land between the Bellagio and Monte Carlo resorts, this is a colossal US$8-billion development with a mix of some 2,600 luxury condominiums and hotel rooms in four buildings including the Mandarin Oriental, The Harmon and the residential Veer Towers.
Of course, the nature of property development is that new projects are started in boom times and open in lean times, but for the developers demand still seems to be strong. The least expensive development at CityCentre is Vdara, an all-condominium hotel with prices starting at US$500,000 and half the 1,500 units have been sold already – many, perhaps, to investors who believe they can rent them out to offset the cost.
At the other end of the scale, there are the 227 additional Mandarin Oriental residences, which start at just under US$2 million each and go up to US$12 million. Even here, there is no shortage of demand – over 90 percent of these are sold.
There are challenges, however, not least because Vegas is once again altering the profile of the visitors it wants to attract. Gone is the emphasis of the Nineties on families. The city has realised that, while families may remove some of the stain of sin from the city, mums and dads spend less at the gaming tables when they travel with their kids, and since the laws about having children in casinos are strict, the city has refocused its attention on adults – after all, “What happens in Vegas, stays in Vegas…”
There is also a “flight to quality” common to many tourist destinations. High-earning, high-spending travellers are targeted at the expense of a greater volume of low-spending visitors, hence the raft of all-suite hotels, and three-figure ticket prices for shows. It’s a good move, particularly since US consumers on middle or low incomes have less money than ever because of the sub-prime crisis.
Unfortunately, because these lower-earners are travelling less, the airlines are cutting back on both routes and capacity. And if the plane doesn’t fly, that means those high-spending tourists with holiday condos in Vegas will also find it more difficult to visit.
For all this, it’s the conventions which power Las Vegas, and until you’ve been to a convention here, you haven’t been to a convention at all. It’s not that they do it better than anywhere else – even the five-star hotels seem to think it normal that, once you have checked in, you should drag your luggage across the casino floor before reaching the bank of lifts which take you to your room – it’s just that they do it on a scale you find hard to believe.
The conference facilities are usually in a massive basement area, although the lack of natural light is less noticeable here than in the resorts themselves (many ground and first-floor casinos don’t have windows so that gamblers won’t know when the sun has come up), and because of their size, there are often several conventions going on at once. Or so it used to be. These conventions, however, are expected to decline by 15 percent this year and that will hurt the hotels.
Even the casinos are suffering, despite the fact that traditionally gambling has been recession-proof. The Tropicana filed for bankruptcy this year and shares in Las Vegas Sands Corporation – the owner of the Venetian and Palazzo resorts – have fallen by 40 percent. Yet for all that, arriving from anywhere else in the world, and particularly from Europe, it’s hard not to be bowled over by the Las Vegas experience.
You might not want to live here full-time, or even part-time (although on my Virgin Atlantic return flight, several couples in Premium Economy were clearly winter residents), but there’s no doubt the city has its own sense of style. It has taken that West Coast confidence and turned it into something so brash and over-the-top that all you can do is shake your head and enjoy what’s on offer, be it the restaurants, special adaptations of famous Broadway shows, shopping, nightclubs or, of course, the casinos. So will Las Vegas survive? You’d be foolish to bet against it.
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