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Gaming Guru

Richard N. Velotta

Analysts Laud Visitor Report

18 April 2005

The typical Las Vegas visitor not only is young and hip, but smart and wealthy -- with a bigger budget for gambling than in years past.

The Las Vegas Convention and Visitors Authority's 2004 Las Vegas Visitor Profile has analysts more encouraged than ever that 2005 is going to be a banner year for the city. The report also has some good news for downtown Las Vegas and says the minority group that is having the greatest impact on local tourism is Asian.

"Overall, the demographic trends point toward not only a younger visitor, but a wealthier and more educated visitor, too," said Marc Falcone, a gaming analyst with Deutsche Bank Securities Inc., in a note to investors.

"In fact, there was a 300 basis point decline in the percentage of visitors greater than 40 years old, with a 400 basis point increase in the percentage of visitors with an annual income in excess of $40,000," Falcone said. "In fact, the fastest growing segments were in the age 21-39 cohort."

The statistics back up the analyst's contention that the next generation of Las Vegas visitors will embrace the Strip's new wave of casino development over the next five years, with mixed-use development, lifestyle branding and no distinct themes.

"As we have previously noted, we continue to believe that 2005 will be another record year for Las Vegas with the LVCVA projecting 38.2 million visitors (+2.1 percent) on continued same-store demand as well as incremental demand driven by the opening of Wynn Las Vegas at the end of the month," Falcone said. "In addition, we would expect many of the above trends to continue, particularly with respect to the revenue mix-shift toward nongaming amenities, along with a younger, hipper, more affluent demographic."

This year's LVCVA annual visitor report has been shifted to a calendar year, instead of a fiscal year compilation. But some of the trends are noteworthy. Although visitors say it's getting more expensive to visit Las Vegas, they're opening their wallets more in the casinos.

The gambling budget of the average visitor increased 11 percent over last year to $544.93 a trip. Meanwhile, the average amount spent on shopping went up 27.9 percent to $124.39 and the average expenditure for shows was up 11.7 percent to $47.21.

Tour packages generally cost 16 percent more than 2003 to $561.49 while nonpackage lodging climbed 5.9 percent to $86.22. The local transportation cost went up an average 32.1 percent to $64.62 while food and beverage went up 14.1 percent to $238.32.

The stay for an average guest remained the same at 4.6 days while the number of nights spent in town was also the same at 3.6 per visit.

Among those who gambled during their trips (87 percent of the total number of visitors), an average 3.3 hours a day was spent in the casino, down 8.3 percent from the previous year.

Visitor origin data suggest that the proliferation of gaming across the United States has not had an effect on Las Vegas. The report said 10 percent of the visitors to the Strip came from the eastern United States while 17 percent came from the Midwest -- locations where casino gambling is available.

While fewer people came to Las Vegas from the western states (48 percent), considerably more came from international destinations (13 percent).

Trends in international seats coming into McCarran International Airport and baccarat play have mirrored the ethnic mix of visitors coming to Las Vegas. The percentage of Asian visitors (7 percent) has caught up to the percentage of Hispanics visiting the city. Hispanic and black visitation was flat while the increase in Asian visitors offsets the decrease in Caucasians.

The LVCVA report said a higher percentage of visitors (57 percent) went to downtown Las Vegas in 2004, compared with the previous year (51 percent)

Of those who didn't go to downtown, there was a greater percentage this year than last of people who either had no interest in downtown or felt they didn't have enough time to see it. Meanwhile, a smaller percentage (3 percent vs. 4 percent in 2003) said they preferred the Strip and fewer (3 percent vs. 2 percent in 2003) also perceive downtown to be a bad area.

Other findings of the LVCVA report:

The much maligned "hassle factor" of airports apparently isn't playing out in Las Vegas. More people (47 percent vs. 45 percent in 2003) arrived in Las Vegas by plane. Fewer people are arriving by bus or recreational vehicle.

The percentage of people riding the monorail doubled from 4 percent to 8 percent, but not at the expense of taxicabs (27 percent said they rode in cabs, compared with 26 percent a year ago). The difference: Far fewer people walked (40 percent in 2004 vs. 56 percent in 2003).

Most people (97 percent) decided where they were going to stay before they ever left home. But more people decided after they arrived where they were going to gamble (80 percent) and what show they were going to see (79 percent).

One in five people still use a travel agent when considering trips to Las Vegas. That's down from the 22 percent that used travel agents to book Las Vegas in 2003.

The survey said 39 percent of those visiting the city used the Internet to help plan their trip. That's up from 32 percent in 2003.

The LVCVA survey's results are based on 3,300 randomly selected visitors with about 275 interviews conducted per month for 12 months. Visitors were intercepted in the vicinity of Las Vegas casinos, hotels, motels and recreational vehicle parks. The report has a margin of error of 5 percent.