While Nevada's casinos don’t report revenue on a daily or weekly basis, it’s obvious from their monthly reports that they’ve been hurting. January 2008 was down 4.75% from the January previous, and so it has gone. The year-over-year comparison for February 2008 was down almost 4%, while gaming win for March and April was off by 1.5% and 5%, respectively.
All indicators are that we can expect to see things get worse before they improve. As BMO Capital Markets analyst Jeffrey Logsdon wrote recently, "Whether in the form of fewer travelers and/or reduced vacation budgets or from fewer convention delegates, we cannot be optimistic about the outlook for Las Vegas for any of the major players."
So what to do? Casinos aren’t wont to divulge promotional strategies and trade secrets, though Boyd Gaming spokesman Rob Stillwell allowed that the company was feeling its customers’ pain. "The tough economy has yet to curtail travel as much as it has impacted spending patterns," he wrote. "Generally speaking, people still have a desire to be social, only they’re being more selective about how they spend for entertainment. Our customers are feeling it ... every time they go to the gas pump, and every time they go to the grocery store, they’re feeling it, just like the rest of us." In other words, Boyd’s customers are still playing, just not as much.
Another casino executive lobbed your query over to the Las Vegas Convention & Visitors Authority’s Erika Pope, who said the LVCVA hasn’t been driven to offering free gas "at this point." (Sheldon Adelson hasn’t gone that far, either, but his new Palazzo has been comping room nights to local players, evidently hoping to lure them away from Boyd properties and, in particular, Station Casinos.)
Short of flinging free gasoline upon the marketing fire, Pope outlines a multi-pronged strategy. Part of it involves increasing the international share of Las Vegas’ customer base from 12% up to 15%. LVCVA international-marketing dollars will be redeployed into markets identified as "major" (Canada, Mexico, Central America, Great Britain), "primary" (Europe, Ireland, Japan, South Korea, Southeast Asia, Australia, New Zealand), and "emergent" (Russia, China, India, Brazil, Russia, and the former "Iron Curtain" countries, etc.).
Still to be addressed are easing the visa process for international visitors and making room at McCarran Airport to handle an expected influx of overseas flights. Of course, with so many U.S. airlines shutting down recently, the latter problem may just take care of itself.
Closer to home, the LVCVA says it's working with tour operators and travel wholesalers to, in Pope’s words, "put together initiatives that will create buzz for Las Vegas. There’s always an opportunity to incentivize travel agents to book [trips] to Las Vegas."
Additionally, resorts can post their value propositions onto what Pope calls "the one-stop shop for special deals that are being made at the time": the LVCVA’s own www.VisitLasVegas.com. The Authority is also studying Vegas’ biggest feeder markets and how much air travel is coming out of them.
"It’s a matter of focusing on our key markets," Pope says –- particularly those where airfares are lower. (Spirit Airlines has been offering short-notice fares of $235 from Detroit and $216 from Fort Lauderdale.) "You may be spending a little more to get here," she contends, "but your experience here will be worthwhile."
Further elaboration was found in an investor note penned by Deutsche Bank’s Andrew Zarnett. "In order to make up lost room night stays, Las Vegas operators will be forced to accelerate marketing efforts to Southern California residents who are typically drive-in customers. The incentive now," he wrote, "as in the past will most likely be lower room rates and possibly the addition of discount gasoline offers."
The LVCVA’s centerpiece remains its "Vegas Right Now" campaign. "What better time to give yourself a getaway" than when your stock portfolio is tanking, Pope asks? "Las Vegas is an alternate universe and that’s part of its allure: An opportunity to say farewell, even for a weekend, to some of life’s drudgery."
