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Room Demand Heads South

LAS VEGAS -- The demand for rooms on the Strip was turning softer even before the collapse of diplomatic efforts to peacefully resolve the confrontation with Iraq, recent survey data shows.

"Results are soft and represent the second consecutive week of negative results for both midweek and weekend rates," said Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm that collected the data.

And demand likely will turn sharply south as leisure travelers opt to stay home for the sake of safety and to watch events on television, analysts said.

Room rates booked three weeks in advance for the week of April 7 were down in the latest data as travelers grew ever more hesitant to book vacations with war looming in the Middle East.

For the second week in April, the average Strip midweek room rate was down 13 percent to $115 for rooms and the weekend rate is down 2 percent to $224, compared with a year earlier.

"We suspect most of the decline is due to tough comparisons and a lighter convention schedule, though travelers may be becoming hesitant to book vacations ahead of what looks like an increasing chance that the U.S. is going to war with Iraq," he said.

Without the National Association of Broadcasters annual convention April 7 to April 10, the next major meeting booked in Las Vegas, demand for rooms would have been in a downward spiral, analysts said.

Broadcaster association spokeswoman Stacy Perrus said registration is pacing on track with last year when there were 92,000 attendees. In 2001, 115,000 attendees were reported.

There are 128,500 convention delegates expected citywide during the period vs. 135,100 last year, Greff said.

It was the second week of significant declines following the National Collegiate Athletic Association's men's basketball tournament, college students' spring break and convention business.

For the first week in April, the average Strip midweek room rate was down 24 percent to $104 and the weekend rate was down 11 percent to $249.

Over the first quarter, midweek comparisons were mixed, with eight of the 14 weeks in negative territory.

A brief war would bode well for tourism in Las Vegas, said Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based financial consulting company.

Still, there tends to be "a lag effect of one to three months before business starts to come back so we'd expect to keep seeing soft demand for at least another three months," he said.

Assessing demand, however, may be "irrelevant" because of unfolding world events, said MGM Mirage spokesman Alan Feldman.

"Right now, we're looking through a crystal ball and a world that may be changed in the next week. We'll have a much better sense of where this is going in a week's time," he said.

Average midweek room rates at MGM Mirage tumbled to $113, down 19 percent, and weekend rates fell to $224, down 10 percent compared with a year earlier.

MGM rates faced very difficult comparisons with midweek rates up 13 percent and weekend rates up 51 percent in 2002 compared with 2001.

Average Park Place Entertainment Corp. midweek room rates dropped to $105, down 9 percent, but weekend rates increased to $258, up 20 percent compared with the year before.

"Weekend rates are particularly impressive given the tough comparison of a 41 percent increase the year before and the fact that several conventions that occurred at Park Place properties last year during the similar period are not scheduled to take place this year," Greff said.

Solid Park Place weekend rates were due to the opening of the new Celine Dion show at the new Colosseum theater at Caesars Palace, said spokesman Robert Stewart.

Average Mandalay Resort Group midweek room rates dropped to $134, down 7 percent from the year before, and weekend rates fell to $208, down 5 percent.

Results were solid at Mandalay Bay and Four Seasons, driven by the opening of the new convention center. The remainder of Mandalay Resort's properties reported lower rates than the comparable period a year before, Greff said.

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