Las Vegas Likes Its Odds Despite Weak Economy

LAS VEGAS —  For all the reasons Californians come here, there’s a growing list of reasons why, this summer, they may not.

Higher gas prices. Hesitancy to leave homes untended during rolling blackouts. A softening economy. The lure of Vegas-style Indian casinos closer to home.

But Las Vegas can spin an economic threat like a roulette wheel, and executives here say they expect this summer to be as strong as last year’s--especially as travelers reexamine their more exotic vacation plans.

Indeed, advance room bookings and airline-room package sales indicate that, for all the distractions facing Southern Californians--who make up nearly a third of the business here--many of them are making Las Vegas their escape of closely choice this summer.

Though budget-conscious travelers may reduce the number or duration of trips to Las Vegas this summer--mostly at the expense of older and smaller hotels--the high-end resorts believe they’ll attract tourists who are steering clear of more expensive and far-flung vacations.

“We don’t expect this will be an all-time, record-setting summer, but Las Vegas--which has always shown a somewhat insulated profile during economic downturns--will probably do very well, especially compared to other big-ticket travel options,” said Alan Feldman, a vice president of MGM Mirage.

“Las Vegas has always been a perfect travel option in tight economic timesbecause the customer can turn it into a very reasonable getaway, or turn it into something quite lavish, or anything in between,” Feldman said.

Wall Street analysts expect Las Vegas business to grow this summer from a year ago, albeit at a slower rate than in previous years.

“It’s decelerating growth--but growth is still growth--and Las Vegas will still see positive trends this summer over last year, which was a good year,” said Jason Ader, who monitors gambling and leisure industries for Bear Stearns.

Travel agents say Las Vegas remains a popular destination this summer, not just because it is easily accessible for Southern Californians but because it is an affordable substitute for more exotic locales.

“I’ve had clients who have thought of going to destinations farther away but, when they consider air fare, they decide just to go over to Vegas,” said Ada Brown, owner of Seaside Travel, a leisure travel agency in Long Beach.

“With such a wide range of prices that are available there, it’s easy--no matter one’s budget--to still go to Vegas,” she said. “And it has an international feel to it.”

Wholesale, packaged travel bookers with strong California connections say sales are up markedly this summer.

Bookings to Las Vegas through August are up more than 10% from last summer at America West Vacations, which packages getaways outside California, said Jack Richards, its chief operating officer in Phoenix.

Though the number of bookings just for hotel rooms is about the same as last year, packages that include air travel have increased, he said.

“While the price of gas has gone up, air fares have remained fairly constant--and most fares from California are on sale,” Richards said. “We believe people are abandoning driving across the desert and are flying instead.”

Michael Reichartz, a vice president of Expedia Inc.’s Travelscape.com, a Las Vegas-based online travel booking business, said he had been bracing for a slow summer, but the numbers have made him upbeat.

“Last summer was great for Las Vegas and, by all accounts, including our own sales and talking to others, we are ahead of last year’s pace,” he said. “People still need a vacation.”

The cruise ship industry is not rolling over for Las Vegas, which it considers, along with Orlando, Fla., its biggest competition.

Because of a glut of new ships, cruise prices have dropped dramatically this summer. At Carnival Cruise Lines, bookings are up 30% from the same period last year, spokeswoman Jennifer de la Cruz said.

“In more difficult economic times, people stay closer to home or look for greater levels of perceived value,” she said. “Vacation products like Las Vegas and cruises both stand to benefit by this.”

In Las Vegas, many Strip hotels reported full houses over Memorial Day weekend. Bear Stearns’ Ader expects some hotels to be sold out at times during the summer, when room rates generally fall because of oppressive heat and reduced convention business.

Still, some cautious hotel executives refused to predict their summer bookings, worried that rosy forecasts would fade before Labor Day. “We don’t know what’s going to happen in California later in the summer,” said one.

For second-tier and off-Strip hotels, the summer outlook is murkier--and that bodes well for consumers.

“I think it’s going to be a summer of incredible bargains” at the smaller hotels, said Anthony Curtis, publisher of the Las Vegas Advisor, a consumer newsletter supported solely by paid subscriptions.

“If visitors are flexible and come during the dog days, they’ll find something good, and this year the bargains will be better than other summers,” he said. Room rates at some off-Strip hotels will drop below $30, he and others predicted.

Curtis and casino marketing executives said hotels will be going deeper into their customer databases to generate return visits with enticing offers.

“When times are good,” Curtis said, “they reward the cream of their lists [with special promotions]. But when times get soft, they work their way down those lists to the point where they’re going after people who just drop a handful of quarters into their slots.”

Even occasional gamblers should join as many “slot clubs” as possible to identify themselves as loyal customers who will be targeted by hotels’ direct-mail campaigns, Curtis said.

Gary Thompson, a spokesman for the parent of Harrah’s Las Vegas and the Rio, said the hotels are prepared to broaden their marketing campaigns if necessary.

“If we experience any weakness--and we’re not yet--we’ll craft offers and draw in customers from our other properties who we know will generate a certain amount of [gambling] revenue,” he said. “We’ll target customers at our riverboats, the Gulf Coast, Atlantic City, even northern Nevada.

“But we haven’t needed to put out any special offers yet,” he said.

Downtown--where casinos may be more vulnerable to a business downturn than the flashier Strip resorts--Doug Hoppe, marketing manager of the Four Queens, is brainstorming campaigns directed at its California customers.

“We’ve kicked around the idea of offering value-added incentives,” Hoppe said. Among them: paying the gamblers’ electric bills while they’re in Las Vegas.

“But we just don’t see the need to offer that yet,” he said. “Some of our July dates are already nearly filled. We’ll see what happens after July.”

The hotel boss facing perhaps the biggest challenge is Richard Brown, chief operating officer of the 1,444-room Stratosphere. He is opening an additional 1,000 rooms late this month, at a time the market traditionally begins to soften.

He said he already has booked many of the rooms through travel wholesalers.

A Southern California advertising campaign, he said, will promote the Stratosphere as a place “to live it up, for less.”

“Las Vegas is known for providing outstanding value and we think a lot of people will forgo bigger trips and come here instead.”

Said one marketing executive:

“You cancel Paris, France, and you go to Paris Las Vegas. You cancel Rome and go to Caesars. You cancel Hawaii and go to Mandalay Bay. You cancel Venice and you go to the Venetian. That’s why we’re somewhat recession proof.”