EDITOR'S LETTER: Souring economy hurting gaming? Not in Pennsylvania
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.