Bursting skyward in the middle of the US’ gambling capital, seven glittering towers are nearing completion. The lavish US$11 billion CityCenter complex will boast a casino, four hotels, luxury apartments, a fire station and even an on-site power station. But its timing could hardly be worse.
A joint venture between the casino operator MGM Mirage and Dubai World, the vast development in Las Vegas is the biggest privately funded construction project in the US. It is billed as “a city within a city” and will sit between the Bellagio’s dancing fountains and the fake Manhattan skyline of New York New York.
The doors of the first tower will open in October. But critics wonder who will fill CityCenter’s 7,000 hotel rooms and apartments. Las Vegas is mired in a recession of epic proportions and CityCenter’s parent company, MGM, is toiling under US$14 billion of debt.
Donald “D” Taylor, head of Las Vegas’s Culinary Union, which represents 60,000 hotel workers, says: “We’ve had a boom here for 20-plus years. Nobody has ever experienced a downturn before. We’ve been hit hard.”
Taylor, an influential Vegas power-broker, adds: “It’s enormously challenging. There’s a lot of steel sticking out of the ground in this valley that’s just sitting there.”
After a quarter of a century of phenomenal growth, Las Vegas has come to a shuddering halt. The seemingly endless supply of gamblers has dried up. So has the conference trade, hardly helped by a warning from US President Barack Obama that bailed-out Wall Street banks should avoid “taking junkets to Las Vegas” on the taxpayers’ dime.
Always good value, Vegas hotels have had to slash room rates by 30 percent to fill beds. Downtown casinos are offering rates of barely US$20 a night. The four-star Las Vegas Hilton, where Barry Manilow is a resident performer, is offering rooms for as little as US$39.
Local unemployment has reached 11.1 percent, compared with a national average of 9.4 percent. And a spectacular collapse in the local housing market has left seven out of 10 homeowners nursing negative equity.
On the city’s world-famous Strip, two huge building sites are eerily quiet. Fontainebleau, a half-finished US$3.9 billion casino that intended to offer perks such as an Apple iMac computer in every room, went bust this month. Echelon, a US$4.8 billion resort that was bankrolled by Boyd Gaming, ceased construction last year.
The much-vaunted CityCenter complex is far bigger. But MGM almost had to pull the plug in March when its partner in the United Arab Emirates declined to stump up toward a US$200 million equity payment. The project was within hours of bankruptcy when MGM’s bankers agreed to a stay of execution.
Gordon Absher, MGM’s vice-president of public affairs, says shutting down was not an option: “For us to stop CityCenter would have been devastating for the company and the community.”
He points out that 8,000 construction workers would have been laid off and the promise of 11,000 permanent jobs would have been lost.
He admits: “We’re experiencing something that is quite foreign to us. I’ve been in Las Vegas for 20 years and it’s always been a boom town.”
Just as Detroit depends on the health of the motor industry, Las Vegas relies on gaming for its lifeblood. Some 37 million tourists a year are lured by a heady mixture of gambling, sunshine, star-studded shows and nightlife. The city’s permanent population has soared from 700,000 in the mid-1980s to 1.9 million as people arrived from all corners of the US in search of steady jobs and cheap housing. But economic migrants are now trickling away.