August 12th, 2010 | Published in Casino News
The opening of CityCenter Las Vegas brought fun and excitement. Month’s later statistics are showing that there are more hotel rooms in Las Vegas than people to fill them. Evidence is appearing that indicates CityCenter is stealing business from other resorts.
Single-Property vs. Multi-Property Owners
This information is much more detrimental to single-property casinos such as, the Riviera and Tropicana which have more to lose than their competitors like MGM International who own multiple establishments on the Las Vegas strip. In the end, the single-properties are generating less money and have a smaller customer base to market too.
Also, visitors are staying at fancier, more expensive hotels because they have lowered their rates (which are aligned with budget hotels) due to the global recession. Many properties are back in the black, but aren’t making as much as they would if CityCenter wasn’t open.
From January through May of this year there was a 1.5 percent increase in visitation to Las Vegas. On the other hand, the number of overall hotel rooms jumped by 5.6 percent over the previous year. The occupancy rate throughout the city from January to May was 80 percent which is a 10 percent decrease from 2007 when Las Vegas tourism was at its greatest.
The total cost of CityCenter is $8.5 billion. The whole complex continues to struggle, not yet turning a profit. In the second quarter of 2010, an operating loss of $128 million dragged down MGM International’s earnings. MGM believes that its competitors are losing even more money due to decreased gambling and room revenue.
MGM’s Aria consists of almost 30 percent gamblers. This is higher than any casino and resort in the Las Vegas area. This is due to marketing specifically to the gaming community who are expected to take the place of the traditional business. The gamblers are MGM loyalty program registrants that receive discounts.
Causes of a Decrease in Revenue
The global recession is the primary cause for the decline in the leisure and entertainment business. Also, with the opening of CityCenter, there has been a huge influx of competition in a tight market. Additionally, there is currently an overabundance of convention space but not enough conventioneers to fill it.
The combination of these things adds up and results in a major decrease in business. Casinos and resorts will need to look to new methods if they want to attract new guests and retain the loyal. Promotions and offers don’t seem to have the same effect as they once did. A new idea must be implemented for the gaming industry to jump back on its feet.