EDITOR'S LETTER: Souring economy hurting gaming? Not in Pennsylvania
by Marian Green
September 1, 2008
A lot of general managers in other jurisdictions would be overjoyed to be showing the positive results seen in the Keystone State
This has not been a good summer for the nation’s gaming
capital. Or for that matter, just about every other gaming destination in the
country.
Excpt for Pennsylvania where the slot parlors
continued to buck the trend. The five Pennsylvania
slot parlors that have been operating for more than a year generated almost 10
percent more combined revenue last month than in July 2007, or about $116.9
million compared with $106.4 million.
“With the economy the way it is and gas
prices, people are going to stay close to home, and we have a good population
around us,” Mike Graninger, general manager of The Meadows, told the Pittsburgh
Post Gazette.
He did tell the newspaper the facility
has given away far more free play than anticipated to entice customers.
But if that’s all he’s got to be worried
about, he ought to be pretty happy. I know a lot of general managers in other
jurisdictions who would be overjoyed to be showing positive results.
Back here in Las Vegas, they’re giving away the store and
are still having to scramble to fill rooms. The other day, my mailbox revealed
a postcard offering two free nights at a Las Vegas Strip resort – no strings
attached. And there’s a different offer like that almost every other day, it
seems.
Nevada’s
precipitous 15 percent drop in revenue for May from the year before was the
largest since the monthly revenue figures began being compiled in 1984.
Pennsylvania’s neighbors
suffered double digit losses in June compared with 2007’s June figures, with Atlantic City’s partly
hurt by the smoking restrictions there.
With gas at $4 a gallon, the mortgage
crisis, higher food prices – who has disposable income to gamble these days?
Airlines slashing routes left and right and raising ticket prices isn’t helping
bring in the business either.
The news isn’t pretty these days just
about everywhere. A recent Reuters article probably summed it up best with this
headline: “Credit crunch deals a losing hand to Vegas.”
The analysis piece noted developers were
finally realizing that their plans to expand the number of rooms in Las Vegas
by 40,000 are coming at the same time gamblers are facing their own money woes
and the mortgage meltdown has made banks wary of overextending themselves.
“A slowdown is probably wise and
prudent given the circumstances,” Carlton Geer, head of the global gaming group
at commercial real estate broker CB Richard Ellis, told Reuters news service.
Wise and prudent, yes. And for better or
worse, it’s happening and has been for some time.
Boyd Gaming’s $4.8 billion Echelon is
already mothballed. The foreclosed-upon Cosmopolitan’s fate remains unclear,
and MGM Mirage has indicated it has no plans to break ground on its
multibillion dollar Strip resort to be financed by partners Kerzner
International and Istithmar Hotels, a unit of government-owned Dubai World.
Another north-Strip project bit the dust when Crown Ltd decided not to invest
any more in that project.
Elad Group isn’t talking much these days
about its planned $8 billion Plaza hotel project on the site of the Frontier
hotel-casino, which doesn’t exactly inspire confidence.
But for those projects under way and
closer to completion, such as Wynn Resorts’ Encore, slated to open in December,
Fontainebleau Las Vegas opening in October 2009 and MGM Mirage’s $9 billion
CityCenter opening in late 2009, this could actually bode well.
A little pent-up demand can be a
very good thing.
In the meantime, I hate to say it,
but I’m kind of enjoying the treatment these days at local and Strip casinos.
I’ve never gotten such nice smiles and accommodating treatment as I have
experienced in the past few weeks. Las
Vegas needed a little humble pie.
But for all our sakes in the gaming
industry, let’s hope it doesn’t last too long.
Marian Green
greenm@bnpmedia.com
Did you enjoy this article? Click here to subscribe to the magazine.
