Times are tough for Las Vegas casinos as for every other sector of the ailing US economy, but that in itself is news because, until this economic downturn, the one place that seemed less affected by hard times was the world’s gambling capital.
“When we look back historically, this is one of the most severe downturns we’ve ever seen,” said industry analyst Brian Gordon of Applied Analysis. “Wall Street is responding much more sharply, but a lot of that is based on concerns about how a global recession will hit gaming and leisure travel.”
The most recent data paints a grim picture that’s expected to get grimmer before it gets better. This September saw 10.1 percent fewer visitors in Las Vegas than September last year, and those who came paid 21 percent less per room night, the Las Vegas Convention and Visitors Authority said. Casinos on the Strip raked in 5.2 percent less in gaming revenue compared to a year ago.
As a result, the stock market has punished every major publicly traded gaming company. Las Vegas Sands (LVS) is down 95 percent, Wynn Resorts is down 71 percent, MGM Mirage (MGM) is down 88 percent and Boyd Gaming is down 90 percent since last year.
Las Vegas Sands’ shaky position was highlighted earlier this month when CEO and majority shareholder Sheldon Adelson announced layoffs of 11,000 construction workers in Macau, where the company has been building an Asian version of the Las Vegas Strip with plans for eight major hotel-casinos.
The company has also halted construction projects in Las Vegas and Pennsylvania. Adelson, who a year ago was named by Forbes magazine the third-wealthiest man in the US when LVS was riding high, has lost an estimated US$34 billion in the decline.
LVS isn’t the only company feeling the pain. Boyd Gaming halted construction of its US$5 billion Echelon project on the Strip earlier this year and has said it is unlikely to resume at least until late next year. Harrah’s Entertainment and Station Casinos are facing looming deadlines on debt service payments and have halted plans for redevelopment or expansions indefinitely.
MGM Mirage, the largest US gaming company with 10 resorts on the Strip, has shed about 8 percent of its workforce in Nevada, or about 3,200 full-time equivalent positions.
The company is still moving ahead with an US$11.2 billion, five-skyscraper complex on the Las Vegas Strip, but sales of condominium units at the center have stalled. The company took reservations on just 32 of them in the third quarter; about 1,300 remain to be sold.
MGM Mirage also has frozen plans to build a second resort in Macau and to develop a large swath of vacant land at the north end of the Strip.
“What we are experiencing now is unique,” said Alan Feldman, senior vice president for MGM Mirage, referring to consumer confidence levels sinking to historic lows.
“Things weren’t great this year but they were holding their own. Then in July and August we really started to feel some pressure and the bottom started to drop out in September,” he said.