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Casino Industry: Companies Braced for War

LAS VEGAS -- The gaming industry in Las Vegas will have to just take the first punch if war breaks out in the Middle East, but plans are in the works to then come out swinging.

Analysts say casinos should be in good shape to fight back, too, having already had to deal with similar conditions after the first war in the Persian Gulf in 1991 as well as the Sept. 11, 2001, terrorist attacks.

"They have learned from going through it before how to deal with it," Deutsche Bank Securities analyst Andrew Zarnett said. "The hard part is no one knows just how severe the impact will be. The general feeling is there will be reduced air travel and reduced overnight visitation. That is what happened in 1991.

"You're always better at something the second time around," Zarnett added. "They got hit under direct circumstances the last time (in 2001). This time, they get to plan. And they also have the experience from the last Gulf War."

Las Vegas Convention and Visitors Authority spokesman Rob Powers said the industry has developed plans already in case war breaks out.

"(We'll) shift our strategy with a heavier presence in drive-in markets such as Southern California and Arizona, redouble efforts in short-haul feeder markets within three hours or less of Las Vegas and change media messages, depending on how hostilities unfold," he said.

He agreed that Las Vegas learned important lessons from the Gulf War and Sept. 11, 2001.

"We did a lot of research. Now we know people perceived Las Vegas as a safe destination in the days immediately after 9-11 and more people were driving (here) than flying. We learned that incentives work," Power said. "And we also learned that for many people in the weeks after 9-11, Las Vegas became a destination of need because they had to escape, get away, and Las Vegas was perfect for them."

Mandalay Resort Group spokesman John Marz said, initially, there will be nothing casino companies in Las Vegas can do to protect themselves from a slowdown if war erupts.

"If war breaks out, people are going to be sitting in front of their TVs just like (during) the Gulf War," he said.

MGM Mirage spokesman Alan Feldman said any marketing plan in the immediate aftermath of an attack would have to take second seat to the impact of world events.

The expectation at MGM is that there will be a significant drop off in business initially, but how large and for how long will remain to be seen, he said.

As time passes, however, the American public will begin to get restless and will start to travel again, he said.

"Then we'll take a page out of the playbook we used in the Gulf conflict and post-9-11 as well," Feldman said.

The most significant issue for marketing Las Vegas in this second phase of a wartime situation is timing, he said.

"You have to be very careful not to market too soon. The public has historically been interested in escapes from what is going on in the world and, for millions, Las Vegas will still serve that purpose. We just need to be sensitive to the timing of going back into the marketplace," Feldman said.

At Mandalay, Marz said his company also has marketing plans in place to implement as soon as the public starts to break away from TV.

"I don't know when that will be, but we will have incentives in place when we think it's the right time so we can move within a day by mail and the Internet. We will be ready to go," he said.

At the convention authority, Powers said it will take time to gauge war sentiment and the challenges for new marketing plans.

"(Still,) one of the reasons Las Vegas began recovering more quickly than competing resort destinations after 9-11 is that we were up and running with a brand new campaign. There is no doubt that campaign helped Las Vegas begin the recovery more quickly than our competitors," he said.

At Park Place Entertainment Corp., spokesman Robert Stewart said any new marketing campaign will stress Las Vegas' safety as a destination and its excitement.

"Clearly, you'll have to persuade people to come here," he said.

Harrah's Entertainment alone among the major gaming operators is marching to a different drummer.

Harrah's spokesman David Strow said the company will continue to rely on its database marketing and development of feeder markets.

"If there is a slowdown as a result of geopolitical events, we have no reason to believe we won't be able to weather this challenge in a similar fashion," Strow said.

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