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Gaming Guru

Richard N. Velotta

Las Vegas Resorts Replacing Canceling Customers

31 December 2003

LAS VEGAS -- Strip resorts that had seen a drop-off in occupancy rates attributed to terrorist threats already are now seeing rooms fill up as the countdown toward 2004 rolls on.

Resort representatives also are applauding law enforcement efforts to ensure the safety of New Year's Eve revelers by restricting the airspace over the Las Vegas Strip.

Gaming analysts for New York-based Deutsche Bank alerted investors that an unusual number of reservation cancellations had been reported in the past week when national media mentioned Las Vegas as a possible terrorist target.

But several Strip representatives said booking patterns aren't any different this year than last year.

Marc Falcone, a gaming analyst with Deutsche Bank, said today that the alert to investors went out after the number of hotels that reported being sold out fell from 14 out of 25 a week ago to four out of 25 this week. The 10 resorts with cancellations that gave them openings were Bally's, Bellagio, Circus Circus, the Las Vegas Hilton, Mandalay Bay, The Hotel at Mandalay Bay, the Mirage, Paris-Las Vegas, the Rio and the Stardust.

"It's difficult to say how much of this could be attributed to normal yield management situations and how much could be attributed to media focus on Las Vegas being a target city," said Falcone, who is vacationing in Las Vegas and will be here for the New Year's Eve celebration.

"We're not totally alarmed by the number of cancellations, but we were surprised," Falcone said.

Falcone said because there are smaller booking windows for reservations as a result of Internet booking systems and continued strong demand, he expects most properties to be sold out come New Year's Eve.

Falcone also said the announcement that federal authorities would restrict flying over the Strip during the hours that the New Year's celebration would be at its peak would be a good thing for tourism.

"We think it's a very encouraging data point for drive-in traffic," Falcone said. "We think it will be viewed as a greater sense of security to visitors of Las Vegas."

Most representatives of Strip resorts said today that the cancellations they had were routine and that empty rooms already have begun filling up. Others said they didn't see the cancellation pattern Deutsche Bank reported.

"We never had any significant cancellations," said Robert Stewart, a spokesman for Park Place Entertainment Corp.

Stewart said all of Park Place's resorts -- Caesars Palace, Paris-Las Vegas, Bally's, the Flamingo and the Las Vegas Hilton -- are at or very near capacity. He said the Flamingo and the Las Vegas Hilton properties have room rates that range from 4 percent to 7 percent higher than last year and the others are at the same average room rate as last year.

"What we're experiencing is very normal for this time of year and we're right in line with what we experienced last year," added Rob Stillwell, a spokesman for Boyd Gaming Corp., which operates the Stardust on the Strip as well as California, Fremont and Main Street Station downtown and Sam's Town on Boulder Highway.

He said systemwide, fewer than 1 percent of the room reservations were canceled.

"It's very likely that we'll be sold out, just as we were last year," Stillwell said.

He said he didn't expect tourists' plans would be affected in any way by the decision to turn the Strip into a temporary no-fly zone.

"We don't think it will change their plans," Stillwell said. "But added security will probably be a positive for those who had the question of security lingering in the back of their minds. Actually, most of the added security won't even be visible to tourists."

Yvette Monet, a spokeswoman for MGM MIRAGE, said the company's Las Vegas resorts -- the MGM Grand, New York-New York, Bellagio, Mirage, Treasure Island, Boardwalk and Golden Nugget -- are on track to be sold out for New Year's Eve.

She also applauded federal authorities' decision to close the Strip airspace.

"We agree with Deutsche Bank that this will be a positive for tourism for the city," Monet said. "We applaud the efforts of those who are working toward the security of our guests."