I’ve seen too many articles like this lately, and couldn’t let this go without comment. Ryan Nakashima of AP quotes prognosticators who believe that hotel and casino construction will not only cause a housing rebound, but a shortage in 2009. Speaking of Las Vegas he said:
The economy might seem depressed if it weren’t for the steady stream of inbound planes laden with tourists, and the glimmer of shiny glass representing billions of dollars of new construction on the Las Vegas Strip.
"It’s going to turn around," Natanel said. "It’s just a matter of time."
One think tank already is predicting a housing shortage by late 2009, as workers are expected to flock to the state to fill jobs created by the megaresort building boom.
"We’re merely at the bottom of one cycle and heading back up on another one," said Jeremy Aguero, one of Applied Analysis’ principals.
He points to the stream of Strip megaresorts planned to go up over the next few years, from Las Vegas Sands Corp.’s $1.8 billion Palazzo, opening in January, to Boyd Gaming Corp.’s $4.8 billion Echelon in 2010.
In all, the surge is expected to add more than 40,000 hotel rooms by 2012 and create about 100,000 direct and indirect jobs, according to Wall Street firm Deutsche Bank.
Similar booms followed the construction of Luxor, MGM Grand and Treasure Island hotel-casinos in the mid-1990s; the Monte Carlo, New York-New York and Stratosphere a few years later; Bellagio, Mandalay Bay, The Venetian and Paris Las Vegas in the late 1990s and Wynn Las Vegas and Red Rock in recent years.
Big resorts open, people come to fill jobs, and homebuilders struggle to keep pace with the influx.
It has been apparent to those of us that watch the condo market that the market is more than saturated. Just because you build it, doesn’t mean they will come. The same is true of hotels and casinos. It cannot be assumed that there is always a direct correlation between the number of hotel rooms available and number of tourists. If a room shortage has not been the limiting factor, more rooms won’t necessarily draw more visitors.
I generally stay on the Strip several times a year, and my favorite hotel is the Monte Carlo. I discovered years ago that if I watched the specials, I could get a room for $70-$80 a night, and even at that price I could get a bunch of specials like a free day at the spa etc. The Las Vegas hotels do that when traffic is down. Check out the current specials at the Monte Carlo here. While there are some expensive nights when the conventions are in town, you can still see specials for as low as $60/night. The Monte Carlo isn’t unique- you see similar specials at the Mandalay Bay, the MGM Grand- and those were just the first few I checked.
According to the most recent report from the Center for Business and Economic Research, unemployment in Clark Country is up 27% YOY, visitor volume is about unchanged, but convention attendance is down -21.2% YOY.
In a cooling economy, one of the first things people cut is their entertainment budget, and Las Vegas will not be immune to that effect. It is my belief that 2009 is more likely going to be the "Year of Excess" for Las Vegas- excess single family housing, excess apartments, excess condos, excess casinos and excess hotels.
The economy may be a mess, but I suppose it will get me a heck of a deal at the Monte Carlo.
