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Arnold M. Knightly

New Year's Eve provides Vegas a boost

30 December 2009

LAS VEGAS, Nevada -- Maybe it's because it's on a Thursday, or maybe it's just because people are feeling more upbeat about the economy.

Whatever the reason, this New Year's Eve is boosting Las Vegas hotel operators' spirits because of higher occupancy rates at higher room rates than last year.

Strip hotel room rates for the year-end celebration are projected to be up 4 percent over last year, when the party night fell on a Wednesday, a weekly report released by J.P. Morgan shows.

Gary Selesner, president of Caesars Palace, credits the trend to customers sensing that the economy has bottomed out and is on the mend, a sharp turnaround from what consumers were feeling at this time last year.

"Last year at this time was the tooth of the economic crisis," Selesner said. "People were really feeling concerned about their financial futures and about the direction of the country's finances. There's less fear out there this year than there was last year."

That more upbeat attitude has helped the 3,300-room Caesars Palace sell out its rooms this New Year's Eve with rates above last year's, Selesner said. The property's owner, Harrah's Entertainment, expects to sell out all 20,500 rooms at its eight Las Vegas hotels.

MGM Mirage, which has nearly 40,000 rooms at nine properties, also has neared renting all of its rooms for the night.

"We are either sold out or near capacity at all of our Strip resorts with room rates that are equal to or exceeding last year," MGM Mirage spokesman Gordon Absher said.

Absher suggested that interest in the company's new CityCenter -- which includes the already sold-out 4,000-room Aria -- could be helping boost occupancy at its properties.

Room rates are up some, too. The average room rate in Las Vegas this year is $379, compared with $364 last year. That rate, however, is significantly lower than the $466 average room rate for Dec. 31, 2007, before the economic downturn.

Absher said customers made reservations earlier this year and are planning to stay longer, probably because New Year's Eve is on a Thursday, making it easier for people to take a long weekend.

The long weekend is helping boost weekend room rates on the Strip, with J.P. Morgan projecting that rates for the whole weekend are up 34 percent from last year.

Other hotel-casino operators are reporting similar trends.

Planet Hollywood Resort, which just opened its 500-room PH Tower across from CityCenter, is charging 15 percent to 20 percent more for rooms than it did last year, Planet Hollywood Hotels & Resorts Worldwide President Bill Feather said.

"We are seeing much more pressure for New Year's Eve this year than we saw last year," Feather said. "Knock on wood, everything's great."

Feather said the property is also benefiting from the opening of CityCenter, which connects to Planet Hollywood by a pedestrian bridge.

Palms owner George Maloof said he expects full occupancy at his resort, which was still advertising rooms for New Year's Eve for $499 a night on the resort's Web site on Monday.

"Absolutely a better response this year than last year," Maloof said. "Very busy. We will sell out, no problem."

Many downtown operators were reporting their hotels were nearing capacity, too.

In the locals market, Station Casinos is expecting to sell out its 4,250 rooms across 11 hotels, but at rates similar to last year.

"Red Rock and Green Valley Ranch are coming in close to last year's rates," company spokeswoman Lori Nelson said. "Palace Station is up slightly and other properties are coming in slightly lower. But it's not a dramatic departure from '08."

The long New Year's Eve weekend is letting hotels charge higher rates for the surrounding dates.

The J.P. Morgan report said average daily room rates for the New Year's week are up 2 percent, to $189 from $185 last year. The number is down from the high of $236 in 2007.

Rates at Aria, for example, are $359 for Wednesday night and $399 for Friday night. The following week, the price drops to $199 and $249, respectively.

The Riviera is asking for $119 to $159 the night after New Year's, up from the average Friday-night rate as low as $79.

Although rates for New Year's Eve and that week are up, average weekday room rates are down 7 percent compared with last year.

And room rates are back down after the new year begins.

For the week of Jan. 3-9, average daily room rates drop 16 percent to $162 per night from $194 last year. Rates are down 14 percent for the weekend after New Year's Eve, according to J.P. Morgan.

The decrease will come despite the Jan. 7 arrival of the International Consumer Electronics Show, the city's largest annual convention.