this article was in great britain's "the independent" newspaper..
The good-time capital of the US has hit a losing streak. Guy Adams reports on an epidemic of bankruptcies, foreclosures and mass lay-offs
Saturday, 5 July 2008
Since the day Las Vegas was created in the shimmering Nevada desert, visitors have been drawn by one simple promise: "What happens in Vegas stays in Vegas". The motto adorns the city's road signs, and has inspired everything from its souvenir T-shirts to the local tourist board's seductive advertising campaigns.
These days, that motto is imbued with a worrying sense of irony. Because America's most outrageous city is facing a growing multitude of problems, and they all boil down to a single, unavoidable point: right now, far too little happens in Vegas, because not enough people are actually staying there.
The onset of global slowdown, high petrol prices, and a nation-wide housing slump is spelling disaster for a town that owes every aspect of its wealth ? from that gaudy replica of the Eiffel Tower to those scale models of Venetian canals and the Pyramids of Egypt ? to its ability to inspire free-spending hedonism.
With Americans cutting back on luxuries, and the price of transport rocketing, the so-called "Vegas vacation" is facing the axe. This week, as the nation celebrated Independence Day, major hotels were taking stock of a fall in all-important room occupancy rates from their usually impressive 95 per cent levels to nearer 80 per cent.
More worryingly, new figures showed gambling revenue has also dropped ? a further 3 per cent this month ? starting a price war between worried firms anxious to lure punters back. Hotel rooms, which last year averaged $130 each, now go for less than $100 (?50).
At the vast Planet Hollywood resort, the clatter of fruit machines and poker chips was this week replaced by an uneasy ? and, for Vegas, very unusual ? calm. A large if slightly tatty double room could be found for less than $80.
No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it's starting to hurt even the town's Elvis impersonators, wedding chapels, and sex industry. When money's tight, the prospect of stuffing another $20 bill into a lap-dancer's gyrating stocking-top somehow doesn't seem quite so enticing.
"This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.
"We've seen a drop in custom here too: maybe 180 people coming in when before we got 200. It's a difficult business, but the girls still have to make a living. We will survive because we own our own premises, we have a good name and location, we don't buy on credit, and we've been around for a long time. But we're very lucky in that respect."
To quantify the Vegas slump, look to the stock market. Shares in casino operators, the engine room of an economy reliant on its liberal attitude to public morality, have been haemmoraging value like a down-on-his-luck gambler.
Las Vegas Sands, which controls the Venetian and Palazzo resorts on the famous neon-lit Strip that runs through a "miracle mile," has dropped below $50 a share, a third of its value last September. MGM is at $28, from over $100 a year ago. Wynn resorts, owned by the ebullient billionaire Steve Wynn ? a Texan version of Donald Trump ? neared $70, from almost $180 last year.
This week, in an attempt to prevent financial meltdown, Nevada's Tourism Alliance convened an "Air Crisis Briefing" in an effort to prevent airline plans to halve the number of flights to the resort. The city's gut-busting "eat all you can" buffets are also being scaled back to account for the US's 4 per cent food inflation. Where a long queue of obesity once trailed across The Bellagio hotel restaurant's ornate carpets, demand for its famous (but now pricey) lunch buffet had on Thursday slowed to a trickle. In what sounds suspiciously like a panic measure, the Golden Gate Hotel this month even said it was doubling the price of its signature 99 cent shrimp cocktail.
For the inhabitants of the desert resort, which was founded in 1905 and became prosperous after gambling was legalised in 1931, it's no joking matter. The growing unemployment crisis (MGM just axed another 400 middle-managers), plus a downturn in the tips that form a significant portion of the Vegas economy, has a human cost, too.
Local bankruptcies have quadrupled. The property market, which rode the wave of a boom for most of the past decade is now below its peak by anything from a quarter to a third (depending on whose figures you believe), while Nevada now boasts, if that is the right word, the nation's highest foreclosure rate.
The number of empty homes has caused a health scare after it emerged that mosquitoes ? possibly carrying the killer West Nile virus ? are breeding in abandoned swimming pools. "We've had crews pumping out pools every day this week," Devin Smith, who manages the city's Neighborhood Response Division, told the Las Vegas Review Journal. "Two years ago, we may have pumped six pools in a season. Now we're probably pumping that a week."
Other sectors of Las Vegas aren't looking too healthy, either. Attendance at conventions, which account for roughly a quarter of the city's income, dropped by 7 per cent this year as impoverished firms cut back on their delegations to recession-hit events such as the Homebuilders Convention.
"The current rate of overall unemployment in this state is 6.2 per cent, the highest since May 1994," said Jered McDonald, an economist with the Nevada Employment, Training and Rehabilitation Department. "Las Vegas seems to be getting the worst of it. Other parts [of the state] aren't so bad; in fact the gold-mining industry is booming, so the drop in employment in big metropolitan areas is actually bigger than that figure suggests.
"With the high oil prices, people don't have much disposable income to spend on gaming and entertainment. So we are looking at a short-term slump, certainly. In the longer term, everything depends on what's going to happen to oil prices."
But the biggest threat of all is that Las Vegas might somehow be perceived to have lost its buzz. Like any tourist economy, the city's fortunes depend squarely on being seen as a "hot" destination, a tag that becomes difficult to justify if potential visitors hear reports that the place is struggling.
As a result, no major strip operators are publicly advertising their new low room rates. None would be interviewed for this article, regardless of the concerns shareholders might have for their fortunes. A spokesman for Wynn Las Vegas, for example, said "Respectfully, we must decline" the opportunity to discuss trading conditions.
And on the horizon is further strife. As a hangover from the frenzied growth of two years ago, Las Vegas is also in the grip of a speculative building boom, with dozens of cranes towering over the Strip.
Wynn Resorts is building a $2.2bn hotel, and Encore and MGM are spending $9.2bn on a 76-acre project called CityCenter. More than 40,000 new rooms will exist in four years, in a city that has 7 per cent of America'shotel beds. The prevailing emotion among business leaders is a mixture of optimism and denial. The Association of Greater Las Vegas Realtors, for example, claims the housing market is finally turning the corner after a "correction" to the long-running bull market that had made Vegas America's hottest location for almost a decade. Rick Shelton, the association's vice- president, insists that the long-term future is rosy and, to illustrate his point, draws a diagram on a napkin in a local cocktail bar. It consists of a circle with the initials "BLM" written outside it.
"This is the map of Vegas," he said. "Inside that circle is the city. Outside it, everything is owned by the Bureau of Land Management. So there's really nowhere else for the city to expand. And yet, the census bureau has forecast that the population of Vegas will grow from two million now to three million by 2016. There's nowhere for those people to go. So this town is another Tokyo, with land as a commodity. You fly in here and you see desert and you think, 'Building, building, building'. But it can't be built on, so prices must go up. And all those Harvard economists are missing that key component when doing their prognosis of our market. The way I see it, we have been in check, and are now aligned for the next spurt, and I'm talking a power arc that's got between seven and 10 years to run."
Dolores Eliades says the history of Las Vegas shows it will find a way to adapt and survive. "Historically, Las Vegas is able to withstand the problems of the rest of the country. When people face hard economic times, they come here to get away from their problems. In the US, people are escape artists, and they deal with problems a little differently from the rest of the world. I believe the history of this town proves I'm right, I really do."
The good-time capital of the US has hit a losing streak. Guy Adams reports on an epidemic of bankruptcies, foreclosures and mass lay-offs
Saturday, 5 July 2008
Since the day Las Vegas was created in the shimmering Nevada desert, visitors have been drawn by one simple promise: "What happens in Vegas stays in Vegas". The motto adorns the city's road signs, and has inspired everything from its souvenir T-shirts to the local tourist board's seductive advertising campaigns.
These days, that motto is imbued with a worrying sense of irony. Because America's most outrageous city is facing a growing multitude of problems, and they all boil down to a single, unavoidable point: right now, far too little happens in Vegas, because not enough people are actually staying there.
The onset of global slowdown, high petrol prices, and a nation-wide housing slump is spelling disaster for a town that owes every aspect of its wealth ? from that gaudy replica of the Eiffel Tower to those scale models of Venetian canals and the Pyramids of Egypt ? to its ability to inspire free-spending hedonism.
With Americans cutting back on luxuries, and the price of transport rocketing, the so-called "Vegas vacation" is facing the axe. This week, as the nation celebrated Independence Day, major hotels were taking stock of a fall in all-important room occupancy rates from their usually impressive 95 per cent levels to nearer 80 per cent.
More worryingly, new figures showed gambling revenue has also dropped ? a further 3 per cent this month ? starting a price war between worried firms anxious to lure punters back. Hotel rooms, which last year averaged $130 each, now go for less than $100 (?50).
At the vast Planet Hollywood resort, the clatter of fruit machines and poker chips was this week replaced by an uneasy ? and, for Vegas, very unusual ? calm. A large if slightly tatty double room could be found for less than $80.
No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it's starting to hurt even the town's Elvis impersonators, wedding chapels, and sex industry. When money's tight, the prospect of stuffing another $20 bill into a lap-dancer's gyrating stocking-top somehow doesn't seem quite so enticing.
"This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.
"We've seen a drop in custom here too: maybe 180 people coming in when before we got 200. It's a difficult business, but the girls still have to make a living. We will survive because we own our own premises, we have a good name and location, we don't buy on credit, and we've been around for a long time. But we're very lucky in that respect."
To quantify the Vegas slump, look to the stock market. Shares in casino operators, the engine room of an economy reliant on its liberal attitude to public morality, have been haemmoraging value like a down-on-his-luck gambler.
Las Vegas Sands, which controls the Venetian and Palazzo resorts on the famous neon-lit Strip that runs through a "miracle mile," has dropped below $50 a share, a third of its value last September. MGM is at $28, from over $100 a year ago. Wynn resorts, owned by the ebullient billionaire Steve Wynn ? a Texan version of Donald Trump ? neared $70, from almost $180 last year.
This week, in an attempt to prevent financial meltdown, Nevada's Tourism Alliance convened an "Air Crisis Briefing" in an effort to prevent airline plans to halve the number of flights to the resort. The city's gut-busting "eat all you can" buffets are also being scaled back to account for the US's 4 per cent food inflation. Where a long queue of obesity once trailed across The Bellagio hotel restaurant's ornate carpets, demand for its famous (but now pricey) lunch buffet had on Thursday slowed to a trickle. In what sounds suspiciously like a panic measure, the Golden Gate Hotel this month even said it was doubling the price of its signature 99 cent shrimp cocktail.
For the inhabitants of the desert resort, which was founded in 1905 and became prosperous after gambling was legalised in 1931, it's no joking matter. The growing unemployment crisis (MGM just axed another 400 middle-managers), plus a downturn in the tips that form a significant portion of the Vegas economy, has a human cost, too.
Local bankruptcies have quadrupled. The property market, which rode the wave of a boom for most of the past decade is now below its peak by anything from a quarter to a third (depending on whose figures you believe), while Nevada now boasts, if that is the right word, the nation's highest foreclosure rate.
The number of empty homes has caused a health scare after it emerged that mosquitoes ? possibly carrying the killer West Nile virus ? are breeding in abandoned swimming pools. "We've had crews pumping out pools every day this week," Devin Smith, who manages the city's Neighborhood Response Division, told the Las Vegas Review Journal. "Two years ago, we may have pumped six pools in a season. Now we're probably pumping that a week."
Other sectors of Las Vegas aren't looking too healthy, either. Attendance at conventions, which account for roughly a quarter of the city's income, dropped by 7 per cent this year as impoverished firms cut back on their delegations to recession-hit events such as the Homebuilders Convention.
"The current rate of overall unemployment in this state is 6.2 per cent, the highest since May 1994," said Jered McDonald, an economist with the Nevada Employment, Training and Rehabilitation Department. "Las Vegas seems to be getting the worst of it. Other parts [of the state] aren't so bad; in fact the gold-mining industry is booming, so the drop in employment in big metropolitan areas is actually bigger than that figure suggests.
"With the high oil prices, people don't have much disposable income to spend on gaming and entertainment. So we are looking at a short-term slump, certainly. In the longer term, everything depends on what's going to happen to oil prices."
But the biggest threat of all is that Las Vegas might somehow be perceived to have lost its buzz. Like any tourist economy, the city's fortunes depend squarely on being seen as a "hot" destination, a tag that becomes difficult to justify if potential visitors hear reports that the place is struggling.
As a result, no major strip operators are publicly advertising their new low room rates. None would be interviewed for this article, regardless of the concerns shareholders might have for their fortunes. A spokesman for Wynn Las Vegas, for example, said "Respectfully, we must decline" the opportunity to discuss trading conditions.
And on the horizon is further strife. As a hangover from the frenzied growth of two years ago, Las Vegas is also in the grip of a speculative building boom, with dozens of cranes towering over the Strip.
Wynn Resorts is building a $2.2bn hotel, and Encore and MGM are spending $9.2bn on a 76-acre project called CityCenter. More than 40,000 new rooms will exist in four years, in a city that has 7 per cent of America'shotel beds. The prevailing emotion among business leaders is a mixture of optimism and denial. The Association of Greater Las Vegas Realtors, for example, claims the housing market is finally turning the corner after a "correction" to the long-running bull market that had made Vegas America's hottest location for almost a decade. Rick Shelton, the association's vice- president, insists that the long-term future is rosy and, to illustrate his point, draws a diagram on a napkin in a local cocktail bar. It consists of a circle with the initials "BLM" written outside it.
"This is the map of Vegas," he said. "Inside that circle is the city. Outside it, everything is owned by the Bureau of Land Management. So there's really nowhere else for the city to expand. And yet, the census bureau has forecast that the population of Vegas will grow from two million now to three million by 2016. There's nowhere for those people to go. So this town is another Tokyo, with land as a commodity. You fly in here and you see desert and you think, 'Building, building, building'. But it can't be built on, so prices must go up. And all those Harvard economists are missing that key component when doing their prognosis of our market. The way I see it, we have been in check, and are now aligned for the next spurt, and I'm talking a power arc that's got between seven and 10 years to run."
Dolores Eliades says the history of Las Vegas shows it will find a way to adapt and survive. "Historically, Las Vegas is able to withstand the problems of the rest of the country. When people face hard economic times, they come here to get away from their problems. In the US, people are escape artists, and they deal with problems a little differently from the rest of the world. I believe the history of this town proves I'm right, I really do."
