etween 1989 and 1997, four waves of
hotel development washed across the urban sand dunes of Las Vegas,
each depositing between 7,000 and 12,000 rooms into the city's
Every wave was heralded by bold proposals, financial bustle and
hyperbolic press releases, and tourists responded with repeat
visits to see the latest mega-properties that, time and again,
seemed to live up to the hyperbole.
Repeat business is important to Las Vegas -- it represents about
75% of all arrivals. But in the past five years, there has been
little new construction. During the whole of 2002, the city saw a
net increase of only 177 rooms.
No major new property will reach completion until Steve Wynn's
La Reve opens in spring 2005. And that property does not a wave
make: It will add 2,700 rooms, about the same number that came on
line during the years between the waves in the '90s.
So, what keeps Las Vegas afloat in the desert? Not family
travel. That much-ballyhooed segment has settled into a quiet
niche, successfully pursued by only a few casinos, notably
Excalibur and Circus Circus.
The city instead counts on three significant ripples to take the
place of the waves: entertainment, restaurants and spas.
"A decade ago, gaming had the greatest impact on the city -- 75%
of the economy came directly from the casinos," said Terry
Jicinsky, senior vice president of marketing for the Las Vegas
Convention and Visitors Authority. "Gaming dollars haven't shrunk,
but their impact on the city's economy is now only at the 50%
level. The other three elements have risen fast."
Though you still can find a cheap, all-you-can-eat buffet
without too much trouble, upscale restaurants opened by big-name,
big-city chefs have become a renewable resource for the Las Vegas
hotels. If a restaurant's buzz begins to die down, the square
footage can always be turned over to a cook with a hotter
"We're also capitalizing on the evolution of entertainment
products to attract repeat visitors," Jicinsky said. The hit
Broadway show "Mama Mia!" opened at the Mandalay Bay earlier this
month, and two more Cirque du Soleil shows are in development,
slated for New York-New York and the MGM Grand.
But the latest twist is that major entertainers will find
long-term homes in Las Vegas venues. On March 25, Celine Dion will
begin a three-year contract to do 200 shows a year at Caesar's
"It's a whole new business model," Jicinsky said. "It's more
attractive to the artist than touring -- she can let America come
to her." Well, not an entirely new model. It sounds a lot like what
put Branson on the map. "Yes, but ours will be at the superstar
level," he said.
As for spas, there now are 25 "first-class" full-service spas in
a town where they were virtually nonexistent five years ago. "We're
building the case that Las Vegas has full resort vacation packages
in addition to gambling," Jicinsky said.
Jicinsky thinks the three-pronged approach is working well --
January 2003 airport arrival rates were higher than January 2001,
the first such increase since 9/11.
And he has not given up hope that another hotel wave is forming
over the horizon. "We keep what we call a planned/proposal list
that tracks all the requests we've gotten from people exploring
construction in Las Vegas," he said. "There's 45,000 potential
rooms on that list right now."
It's good to know that speculation, gambling's high-class
cousin, is not completely dead in Las Vegas, but for the
foreseeable future, money is going into multiple small enterprises
rather than larger projects.
It says a lot about our current economic climate when a city
accustomed to making a big splash ends up developing ripples rather