Editor’s Note: This is the ninth in a
15-part series (appearing on LodgingMagazine.com each Monday) examining
the performance of various markets in the United States. The following
is courtesy of Deloitte’s “Hospitality Vision US Performance Review.”
Las Vegas remains one of the largest hotel markets in the world attracting both leisure and business travelers. In fact, the tourism industry continues to show signs of a steady recovery, as the city welcomed 39 million visitors in 2011
(up from 37.3 million in 2010).
STR metrics revealed the city’s RevPAR through November 2011 had increased double digits to 13.1 percent from the first 11 months, with an 8.9 percent increase in occupancy to 65.20 percent. Average room rate increased 3.9 percent to $89.91.
As of October, the Las Vegas Convention and Visitors Authority reported 20 consecutive months of gains in prior-year comparisons. Taxable sales rose all year long (by double-digit percentages in some months), while statewide gaming revenue rose nearly 10 percent year-over-year.
According to TripAdvisor, leisure travelers continue to choose Las Vegas as the “number one for best value” in the U.S. A new survey from Deloitte LLP reveals that for business travelers Vegas is the top “hot spot.” More than 60 percent of business travelers visit the city to attend an industry event; but only 38 percent of these expect to spend on entertainment and gaming.
Looking ahead, the Las Vegas Convention and Visitors Authority developed a three-year business plan that outlines aggressive strategies for growth. Introduced in November, the plan recommends targeting key market segments, especially international travelers who typically stay longer and spend more than their domestic counterparts. International travelers currently make up 18 percent of visitors; the city’s goal is to increase this market share to 30 percent over the next decade. The plan’s tactics include sales, public relations, and marketing efforts overseas. The authority also committed $5 million in aesthetic and functional enhancements to the Las Vegas Convention Center (breakingtravelnews.com).
A proposal for a $1.57 billion Las Vegas National Sports Center includes a 17,500-seat arena for basketball and hockey. Both the baseball and football stadiums could also be expanded. In the spring, developers announced plans for an amusement park, a new shopping and food area, and a pair of Ferris wheels, all intended to stimulate tourism on the Strip (UPI.com).
Mid-summer, KTNV reported that, after an eight-year negotiation, the Humboldt-Toiyabe National Forest Service approved the plan of the Las Vegas Ski and Snowboard Resort to add 50 new ski runs, more parking, a new lodge, and more jobs for locals.
Despite good news overall, a few problems persist.
The “Strip” lost significant market share to Macau and Singapore gaming industries, which suggests that the hospitality industry will continue to struggle. As a result, enterprises like the Station Casinos LLC, after shedding more than $4 billion in debt and emerging from bankruptcy in June, still faces challenges in returning to profitability.
According to the U.S. Bureau of Labor Statistics, the 2011 unemployment rate for Las Vegas was 12.5 percent. (But the outlook perked up a bit toward the end of the year, and a year-over-year comparison shows a total increase of 12,000 local jobs). A report issued by the Brookings Institute says that Las Vegas faces two related economic challenges: a relatively uneducated workforce and a dependence on industries most vulnerable to the recession.
The city is also the nation's top market for foreclosures. By the end of the year, one in seven homes in Nevada was vacant and house prices continued to slide, falling nine percent from 2010. As Vegas Inc. notes, low consumer confidence leads to less spending, especially on travel and entertainment.
Perhaps most illustrative of persistent challenges, in November the city government moved employees into the new $127 million City Hall, which some say is likely to remain mostly vacant. According to the associated press, the nine-story building was designed to hold 600 staffers. But only 200 moved in because of several rounds of budget cuts and hiring freezes. (The city council decided to build the hall five years ago, before the bust in housing and tourism).
In October, McCarran International Airport reported its highest monthly passenger counts of the year with 3.7 million passengers. Expansion plans for the airport complement a growth strategy, as a new terminal (scheduled to open in June, 2012) should boost the city’s ability to handle international visitors. According to USA Today, customs will be able to process 2,200 passengers per hour (a big increase over the current capacity of 800).