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Casino Operators Cut Room Rates

LAS VEGAS -- Many Las Vegas casino operators are offering steep discounts from published room rates to defy national travel trends and pull occupancy rates upward.

Lagging convention business and a troubled economy nationwide are compounding problems through the end of the year, traditionally a soft period in the Las Vegas market, said Harrah's Entertainment spokesman Gary Thompson.

Despite the annual fall Comdex 2002 that starts next week, midweek discounts of 25 percent to 33 percent from published, seasonally adjusted rates are being offered by major resorts including Circus Circus, Four Queens, the Golden Nugget, the Mirage, New York-New York, Palace Station, the Rio, Sahara, Hotel San Remo and The Venetian.

By comparison, a Internet search using Expedia.com showed comparable hotels in Orlando, Fla., are offering discounts of 15 percent to 50 percent, a limited number of hotels in New York City are offering discounts of 15 percent to 30 percent, only one hotel in San Francisco is offering discounts and no hotels in Honolulu are discounting.

Major hotel chains nationwide, particularly Marriott International, Starwood Hotels & Resorts Worldwide Inc. and Wyndham International, have been rolling out discounts and other incentive programs this week in order to fill rooms through the end of the year.

Arne Sorenson, chief financial officer at Marriott, has said the current visitor industry slump qualifies as a 50-year low for hotels nationwide.

In Las Vegas, reservations for the annual fall Comdex are coming in late and organizers project attendance will approach last year's levels only because of steep room discounting, sources close to the event said.

Attendance at last year's Comdex Fall 2001 at the Las Vegas Convention Center declined to an estimated 110,000 to 125,000, down from 200,000 to 210,000 the year before.

"Some conventions that have been real big in the past such as Comdex just aren't pulling in the same numbers," Thompson said. "With the demise of the dot-com operations and problems with the technology industry, they're just not spending the money they used to spend.

"Overall, the economy is not what we'd like to see, so you'll see soft sales," he said.

At the Las Vegas Visitor and Convention Authority, spokesman Rob Powers said: "Because of what's happened in the high-tech industry, many of our related trade shows have been impacted in terms of attendance, but others are doing well."

For instance, the just-completed SEMA Automotive Show beat projected attendance by 20,000 and the 2003 International Consumer Electronics Show is expecting "normal attendance" in January, he said.

Still, weak market conditions on the Strip and soft room rates are troubling Wall Street where gaming stocks fell 2.5 percent last week alone compared with a slight increase in the Dow Jones Industrial Average.

"Expectations were we'd get back to 2000 levels by the fourth quarter or the first quarter of next year," said Deutsche Banc Securities analyst Marc Falcone.

"We haven't see that yet. Revenue expectations are trailing what needs to occur for stocks to get a multiple for current levels" and rebound, he said.

"Investors are very focused on room rates in the market," Falcone said. "Historically, there has been a close correlation to stock prices."

Soft rates are "a sign demand is suffering and that's something Wall Street is very wary of," he said.

Midweek discounts of 25 percent to 50 percent also are being offered for the first week in December by Circus Circus, Fitzgeralds, Four Queens, the Golden Nugget, Hard Rock, Imperial Palace, MGM Grand, Mirage, New York New York, the Rio, Sahara, Hotel San Remo, Stratosphere and Treasure Island.

By comparison, hotels in Orlando are offering discounts of 5 percent to 35 percent that week, only one major San Francisco hotel is offering room discounts, and no comparable hotels in New York City or Honolulu are offering discounts, according to an Expedia.com search.

Weekend discounts of 30 percent are being offered for the middle of November by Mirage and The Venetian and discounts of 25 percent to 50 percent are being offered for the first weekend in December by Circus Circus, MGM Grand, the Mirage, Stratosphere and Treasure Island.

Discount packages of 25 percent to 50 percent are being offered over the holidays by the Golden Nugget, Hard Rock, Harrah's, MGM Grand, The Mirage, New York-New York, Palace Station, Paris Las Vegas, the Rio, the Riviera, Stardust, Stratosphere, Treasure Island and The Venetian.

Venetian spokesman Kurt Ouchida said the property has felt "little impact from the fallout of the convention end of the business."

"We do send out promotional rates all year long in order to fill softer periods of the calendar," he said," but we'd rather approach this from a yield management perspective rather than sit on unused inventory."

At Harrah's, Thompson said: "We're a little different. We do not see room rates as a measure of our performance. We look at gaming revenues per room and comp a lot of rooms. Overall, our gaming revenue per room is holding strong."

And Park Place Entertainment spokesman Michael Coldwell said his company's "properties are strong occupancy (through the end of the year ) and trending ahead of 2000."

"Comdex week was a question citywide and, fortunately, we're going to fare very well during that period," he said.

The Paris Las Vegas discount program is part of an integrated marketing program and not an occupancy-driven promotion, Coldwell said.

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