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Las Vegas Execs Eye Local Economy

LAS VEGAS, Nevada – Oct. 3, 2001 -- When you get right down to it, nobody knows.

Not a CEO, not a CFO, no one in the alphabet soup that's corporate gaming has a sense of where the local and national economies are headed.

That includes Tom Gallagher, Bill Weidner, Terry Lanni, Glenn Schaeffer and any other executive who runs a top Strip casino company.

They agreed Tuesday in a variety of settings that the numbers are looking better than they did in the days immediately following the Sept. 11 terrorist attacks.

More people visited the desert city this past weekend than the weekend before and the weekend before that.

But there's a caveat: those that are coming are spending less than they did a year ago, with room rates about half of what were expected.

"Clearly, we're in for some rugged times over the next few months," said Gallagher, chief executive officer of Park Place Entertainment, whose company has laid off 1,500 workers in response to the worldwide travel slowdown. "The recovery will be gradual." He noted that a few of his company's recently unemployed have returned to work because of the slight uptick in business. But that recovery, Gallagher added, is subject to uncertain national and international events.

In the cautious speak of the day, he was referring to the economic impact of a shooting war in Afghanistan and any future terror attacks on U.S. soil.

"Who knows? You really can't speculate," Gallagher reflected of what might be. He delivered his comments in a hallway at the Las Vegas Convention Center before an 11 a.m. panel discussion at the Global Gaming Expo.

In a nearby meeting room, Weidner, who is chief executive officer of Venetian parent company Las Vegas Sands Inc., spoke of recent business trends at the 3,036-room megaresort and the neighboring Sands Expo Center.

"We're having a promising beginning to October," he told several dozen fund managers before offering his own caveat. "The next couple of weeks will be challenging because we did have a couple of cancellations."

Average nightly room rates at the Venetian were $229 the weekend before the attacks, fell to $175 the following weekend and $152 the next before rebounding to $190 this past weekend.

But high-end table play is off dramatically at the upscale property, with baccarat revenue falling to $621,000 this past weekend, down from $7.4 million the weekend before the attacks.

Asian high rollers, who constitute the highest of the city's high-end gamblers are apparently choosing to stay home.

Yet, slot play is up, as budget conscious tourists flock to the Venetian during the weekends to take advantage of those lower nightly room rates.

The hotel-casino reported slot revenues of $17.8 million this past weekend, up from $14.7 million the weekend preceding the attacks.

"A lot of that is driven by (the fact that) our business mix has changed," Weidner said of his evolving customer base.

Lanni, chairman of MGM Mirage, echoed the thoughts of Americans throughout the country when he told more than 1,200 people who gathered for that 11 a.m. panel discussion, that people must return to some variation of their pre-attack routines. Work, travel, play, but expect change, he cautioned.

For McCarran International Airport, the nation's seventh busiest airport, that change is seen through lengthy delays, as security workers sift through bags and identification, as the federal government tries to prevent a repeat of the terrorist hijackings.

"We're going to have to change our lifestyles," Lanni warned of the security measures.

An hour later, Schaeffer, who is president and chief financial officer of Mandalay Resort Group, spoke to his own audience of fund managers, when he struck a somewhat optimistic tone.

"There is an uptick clearly," he said, "but we have a ways to go."

A crowd member asked Schaeffer for details about the company's recent hotel room rates, numbers that are generated on a price-to-fill basis in the supply-and-demand world of Las Vegas Boulevard.

The at-times prickly executive declined to provide those numbers, saying they were now meaningless.

"Whatever happened in the last two weeks is not going to happen in the next two weeks," he observed.

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