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Gaming Guru

Rod Smith
 

Inside Gaming Column: Bulls Base Outlook on Relentless Boom

3 October 2005

Wall Street remains bullish on gaming. Despite rising gasoline prices and airfares and the wreckage from hurricanes hitting the rest of the hospitality industry hard, analysts say America's infatuation with gambling never seems to flag, thanks to the love affair baby boomers are having with Las Vegas. That, plus the industry as a whole gets a small share of its revenue from the hard-hit Gulf Coast area, anyhow. Analysts say to expect more investment in Strip projects, not less, thanks to seemingly relentless consumer demand.

Skeptics are wrestling with rumors run amok about property consolidations involving the Sahara, Wet 'n Wild, the Riviera and neighboring properties. The opportunities for another megaresort are real, they say, but it will take a $2 billion-plus ante to get into the game, buy out the owners and launch a major redevelopment. Small fish are just trying to hype their own prospects. An investor with the staying power of really deep pockets is going to win out.

Meanwhile, gaming operators are catching their breath after rates for rooms booked in advance dropped precipitously at the beginning of October. Wall Street reported average rates were down a historic one-third from the previous year, but a strong convention calendar pulled prices and revenue back in line with long-term expectations. While operators say smart rate management gets the credit, naysayers say to hold on for a rough ride over the fall.

In the same vein, meeting planners say long-term demand for convention space in Las Vegas is reaching a crescendo. Trade-show organizers say membership and attendance always grow when meetings are planned for the Strip. And, they add, the projected boom in new developments is creating a long-term cachet like never before. Couple that with doubts about Gulf Coast redevelopment anytime soon, and some hotel-casinos say they are actually booking rooms as well as meetings as far as a decade in advance.

West Coast media are crediting local developer Steve Wynn for having "the vision thing." Wynn is telling the world his "Avenue Q" Broadway puppet show proves Las Vegas is likely to become the New York theater district's "off Broadway." That fits with what MRC Group honcho Jim Medick has found with his survey research lab in the Grand Canal Shoppes. Medick says if the income demographics fit, you can find any U.S. geographic cross section here in Las Vegas. That's why his studio and its counterpart at MGM Grand have proved successful testing movies, TV shows, commercials and national product lines.

Gaming Wire Editor Rod Smith can be reached by e-mail at rsmith@reviewjournal.com or by telephone at 477-3893.