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Rising Room Rates Leave Doubts

After hefty holiday discounting to hold the line on hotel occupancy, casino operators are raising room rates for the post-New Year's weekend.

Average weekday rates across the Strip increased to $123 in the week ending Jan. 4, up 38 percent compared with the same period a year earlier, according to survey data collected by Bear, Stearns & Co.

Still, Wall Street analysts warned it is too early to break out the bubbly.

"One data point doesn't make a trend," said Bear, Stearns analyst Jason Ader. "I'd like to see a couple more data points before I make a prediction about the coming year."

The period is getting a one-time boost because New Year's Day falls on a Wednesday, leading visitors to plan their vacations after the holiday, he said, and may not represent things to come.

Also, the rate increases come on easy comparisons as rates fell 7 percent in the 2002 period.

Still, compared with the pre-Sept. 11, 2001, period, rates so far have increased a solid 28 percent.

Meanwhile, average weekend rates across the Strip increased to $124, up 10 percent for the post-New Year's weekend.

The improvement came on very easy comps as rates fell 63 percent in the prior year period.

Analysts warn, however, the rates are dropping and will keep decreasing as the holidays approach.

"We need to see if there's capacity as we get closer to New Year's," said Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based financial consulting company. "The hotels will drop rates as the holidays get closer to get customers into the facilities."

The picture is further clouded by international travel and possible cancellations, analysts said.

"What will affect the (post-New Year's performance) is the level of international travel," said Fulcrum Global Partners gaming analysts Joe Greff.

"International high-end travelers are still promising to keep their reservations, but it's too early to tell if they're going to cancel," he said. "There's still a lot of wood to be chopped for December and early January."

So far, Park Place Entertainment Corp. has reported the largest weekday rate increase, 92 percent, among the big three Strip operators for the period ending Jan. 4. Rates in the year earlier period had been down 41 percent.

Weekday Park Place rate increases were driven by significant increases at Paris (132 percent), Bally's (102 percent) and Caesars Palace (168 percent).

Weekday Park Place results increased 37 percent, compared with the pre-Sept. 11, 2001, period.

Meanwhile, Park Place rates for the first weekend in January increased 15.4 percent.

MGM Mirage weekday rates increased 36 percent, to $155, in the Bear, Stearns survey.

Results were driven by increases at The Mirage and Treasure Island, up 92.4 percent and 248.3 percent, respectively.

Weekday Mirage rates increased 31 percent, compared with the same periods in 2001.

Meanwhile, Mirage rates for the post-New Year's weekend increased 33 percent, to $169, compared with the prior year period.

Mandalay Resort Group weekday rates increased 27 percent, to $113, the survey said.

All Mandalay Strip properties met or exceeded 2002 weekday room rates during the period.

In addition, Mandalay posted a sold-out adjusted 35 percent increase, compared with 2001 rates.

Rates for the Jan. 4 weekend improved modestly, up 5 percent, to $128, compared with 2002 weekend rates.

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