How Long Is Your Yardstick?
March 11, 2010
One day, two stat-filled press releases:
Las Vegas saw more than 2.8 million visitors in January, up 4 percent from the same month a year earlier.
Figures released Wednesday by the Las Vegas Convention and Visitors Authority also show that convention attendance dropped by 16.4 percent from January 2009 to January 2010, to just under 450,000. The decrease was accompanied by a drop in the number of conventions and meetings held, which fell from 1,368 in January 2009 to 1,197 this January.
January marked the fifth straight month that year-over-year visitor numbers increased.
The visitors authority says 8,000 net additional rooms this January over last January resulted in a drop of 0.8 percent in citywide occupancy.
The average daily room rate also fell from $104.89 to $99.75, a drop of 4.9 percent.
Shortly after the above release was published, a very similar story hit the news services:
Thanks in part to the recession, Las Vegas has the nation’s most popular and affordable hotel rooms, according to a twice-annual survey by the travel reservations Web site Hotels.com.
Rates plummeted significantly from the first half of last year, when Las Vegas was ranked 45th in hotel pricing nationwide.
Las Vegas was the top destination for domestic travelers and the No. 2 destination for international travelers, behind New York, according to the survey, which is based on Hotels.com bookings made in the last half of 2009.
Average daily rates in Las Vegas from July to December fell 18 percent to $79, the company reported. By comparison, rates were $109 per day in the first half of the year.
This all seems like swell news, and it probably is, but there is at least one interesting inconsistency in all of the numbers swirling about.
The LVCVA reported average daily rates as $99.75 while a major hotel-booking site reported them to be $79.
For those of you keeping score at home, the LVCVA is being 26% more optimistic than the private company. The private company also says that rates dropped 18% in 6 months, and the LVCVA says they only fell 4% in an entire year.
Who’s right? Who’s wrong?
Who knows?
The thing about stats is … they usually lie.
Numbers are easy to throw out, and since few people have the resources or initiative to double-check them, you can more or less make numbers up and still sound plausible. Even if you do know absolutes, there are a myriad of ways to manipulate them to show what you want to prove. For example, the Visitor’s Authority may have used a smaller starting number (104 vs. 109) to make the decrease look less dramatic.
If I had to take a wild guess, I would opine that the LVCVA’s rates are less accurate since the promotion of optimism is their one and only job, but I have no hard data to back that up, other than a hunch and a small amount of common sense.
Las Vegas Strip Crowd
Fortunately, much of the new influx of visitors is comprised of people who are content with Wackjack, Crapjack, or whatever. I’m actually warming up to the “Crapjack” suggestion and may use it instead. See Mr. Snow, that’s how to put your ego aside, take a superior reader suggestion and put it to use. Despite your best efforts, sometimes other people come up with better ideas. The inability to recognize this is not a virtue.
Anyway, this “low room rate/low gambling odds” business model was fully validated by the NASCAR fans last week who openly played $5 6:5 tables directly adjacent to $5 3:2 tables with open seats. This extra gaming skim from the lower-middle-class almost certainly makes the room rate decreases easier to swallow for the properties. The casinos are making a calculated bet that people availing themselves of $79 rooms probably aren’t the most discerning customers when it comes to gambling, and they seem to be absolutely correct.
The problem is, I believe that chasing off discerning gamblers is a long-term losing strategy for the town. Then again, if I actually knew anything about how to get the city on track, I’d be sitting on $87 million of taxpayer money rejecting suggestions from constituents instead of sitting behind a monitor with my pants around my ankles.
In any event, while these numbers look promising, they do reflect the cannibalization that was somewhat expected with the opening of City Center. Without double-digit visitation increases, the supply/demand curve will not be saturated enough to warrant an increase in room rates. We simply cannot withstand any more dilution.
Las Vegas Strip Crowd
Tower X (formerly known as the Fontainebleau) from Rexville
This realization cannot be lost on Tower X, formerly known as the Fontainebleau (it currently has no name, and thus is an unknown variable). In addition to the Strat, I live every day in the shadow of Tower X. It’s quite dominant on the Rexville skyline. I’ve been waiting a long time for it to open, but at this point, I think opening would spell the swift demise of the property.
There simply exists no demand for the rooms, and if it opens within the next couple of years, it will fail. I’ve finally reached the “acceptance” stage of grieving. I’m just surprised they haven’t slapped a gigantic wrap on it yet. I wonder how much they would charge me to put a 700′ high “VegasRex” banner down the side?
It’s something to explore.
Anyway, if you thought Vegas was cheap last year, you haven’t seen anything yet.
Written by Bill Nye on March 11, 2010 at 8:58 pm
Rex, glad you are back, keep taking care of yourself and will you jump from the Strat? Bill
Written by joelmama on March 11, 2010 at 9:16 pm
Rex,
The difference in the numbers could be because they cover different periods. The LVCA numbers cover January which is probably a bit higher on average because of CES. The hotel website is looking at the second half of 2009. The first half they reported 109 so the average for the year they reported should be somewhere near the middle at $94. Much less of a difference.
Written by happylongmeadow on March 11, 2010 at 10:40 pm
Perhaps the LVCA included “Resort Fees” when releasing their version of the numbers.
It’s all about “creative accounting”. Kind of like what some people, present company and readers excluded, may do on our W2 IRS returns.
Written by DoubleDownNow! on March 11, 2010 at 10:48 pm
I was there last month and it was a lot busier than when I was there in October, especially mid-week. This Summer should be a good one!
Written by Jimc on March 12, 2010 at 2:42 am
Rex, Glad to hear your back in business and hopefully fully recovered from protecting us from the camera lady. I’ll be staying at the Riv in April and I was hoping David Blane oe someone would have made the Blue go away. Oh well.
Written by buttnugget on March 12, 2010 at 2:42 pm
Things do seem busier in Vegas. Definitely more people and I think this is a result of the drop in hotel room prices. However, that said, I’m not sure that those increased crowds are helping. Casinos seem dead. Harrah’s and TI in particular. The restaurants (the higher end ones) seem empty as well. This seems to be the “Hotels.com Effect.” Basically hotels.com says you can get a 5 star hotel for a 1 star price. Well, what that does is put 1 star people in 5 star hotels! Lots of bodies all standing around gawking at the sights but not parting with any money while there.
Written by Limey on March 12, 2010 at 2:54 pm
Las Vegas casino owner’s are investing in China
There are 32 casinos in operation, 20 of which are either owned or managed by Dr. Stanley Ho’s SJM. Galaxy Casino has 5 venues, Las Vegas Sands 2, Wynn Resorts 1, Melco Crown 3 and MGM/Pansy Ho 1. The last opening was the SJM managed L’arc Casino that opened 20th September, 2009.
Macau’s casinos saw near-record takings in February 2010, according to figures published Wednesday. The southern Chinese gambling resort took 1.68 billion US dollars in casino revenue last month, 69.4 per cent more than in the same month in 2009 and the second highest monthly figure ever. Total casino revenues are estimated by analysts to have peaked at 87.55 million US dollars per day in the second half of the month, twice the average daily spend for February 2009.
The surge in casino takings, recorded in preliminary figures for the month, reflects a recent flood of money into the city of 500,000 from mainland China. Casino revenue in Macau over the past six months has risen 56 per cent year-on-year to 9.32 billion US dollars, according to the figures published in Hong Kong newspapers Wednesday. Much of the revenue is generated by large volumes of business on high-stakes baccarat tables favoured by “high roller” gamblers from mainland China. Casinos are outlawed in the rest of China. Macau, a former Portuguese colony that reverted to Chinese sovereignty in 1999, is Asia’s biggest gambling resort and has revenues that sometimes exceed those of Las Vegas
China’s ambition is to try and develop Macau casinos into a major tourist gambling destination far superior to the likes Las Vegas, Nevada and Atlantic City? Sure, wouldn’t that be your ambition, too? Macau also has plenty of bars and nightlife in addition to the casinos. Macau itself is delightful town and fun for any tourist and vacationers……Limey
Written by Ron from MI on March 13, 2010 at 3:05 am
“Anyway, if you thought Vegas was cheap last year, you haven’t seen anything yet.”
I agree. it’s going to take a lot more effort, a lot more bargains and a lot more planning just to get people coming to Vegas, even if it means going back to basics.
Written by McGoo on March 13, 2010 at 9:40 pm
Cheap is right, I just booked my next trip to Vegas in April and was amazed at some of the rates. The most surprising development is the lack of direct flights to Vegas from Detroit and Toronto. I found it very frustrating as I only could choose from 2 of 3 direct flights a day across all providers. Personally I am a very cheap person and find it a challenge to come to Vegas as cheaply as possible, and to eat and gamble as cheaply as possible. This time around I booked a sun and monday night at Bally’s for $40 a night (cheaper than IP) and 3 nights at Golden Nugget for $60, $40 and $40. Although in Oct of ‘09 I stayed at the Bellagion for 6 nights with an average room rate of $119.
I’ll see ya at the $3 3:2 tables at the El Cortez and Gold Spike!
Written by jmasco on March 15, 2010 at 10:06 am
macau’s nightlife cannot compare to vegas, or even most small towns, because it has virtually no nightlife. all the clubs they do have are filled with nothing but hookers (so are clubs in vegas, but in macau their actual profession is nothing but prostitution, while the club girls in vegas are essentially hookers but do usually have legitimate jobs). no one is drinking in the casinos, and they’re quiet because it’s a place to only seriously gamble. if the locals want to go out, they head to hong kong.