Las Vegas Down and Out

This article paints a tough picture for Las Vegas and casinos, but the charts of Las Vegas Sands Corp. (LVS) and Wynn Resorts (WYNN) showed a problem long before the article hit the wires.

2 thoughts on “Las Vegas Down and Out

  1. I was interviewed for a hedge fund publication about a month ago, and they kept asking how long “discounting” (lower room rates and other lower rates or discounts for services) will last.

    I kept telling them “It isn’t discounting. It is simply a return to the way Las Vegas did business (successfully regardless of the economy) for decades in the past.

    It used to be that a hotel room in Las Vegas would go for 20-40% less than a similar room in another city. After a few years of Las Vegas prices being over-inflated due to unusually high demand (Vegas was simply the hottest destination as portrayed by everyone from the tabloid TV shows to Travel Channel), things are coming back to normal.

    Gaming stocks are as far down as they are partially because of the snowball effect of all the “Vegas is in trouble” stories.

    Las Vegas will be fine. But only after if morphs back into what Las Vegas used to be: This crazy place in the desert where most of the residents worked in gaming and tourism offering great service at really good prices with the opportunity to win some cash mixed in.

    This recent theory that Las Vegas should be a cosmopolitan destination known for expensive shopping and even more expensive hotel rooms was never a good long-term strategy.

    However… that means for gaming companies to rachet back up the profits, they do have to go back to the tactics of the past: Getting people to gamble and keeping the games just loose enough to keep people playing. In the quest for short-term profits, gaming properties have altered table game rules (6-5 blackjack) and tightened slots to the point that people just aren’t drawn to play all day long like they used to. And the longer you play… the more you feel that you “deserve” that big win… and the more likely you are to empty your wallet before the day is over.

    Ted Newkirk
    Managing Editor

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