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Rod Smith

New Year's: Strip No-Shows Surface

30 December 2003

LAS VEGAS -- Cancellations for New Year's Eve jumped dramatically in the past week at previously sold-out Strip hotels, a Deutsche Bank survey found Monday.

While only four Strip properties still reported rooms available last week, cancellations had opened rooms at 10 added major properties as of Monday afternoon, Deutsche Bank analyst Marc Falcone said.

While cancellations and rate discounting are common before any holiday, the volume of cancellations is more than double those experienced at the same time last year, a Deutsche Bank advisory to investors said Monday.

"We were surprised to see the (high) level of sell-outs decline as much as they did last week," Falcone said.

National stories caused the bulk of the last-minute cancellations, he said. Raising the terrorist alert level to orange from yellow last week and managing room inventory may also have played roles, he said.

Falcone added that the Deutsche Bank survey this year found cancellations at other destinations such as Orlando, Fla., were in line with previous years. He said the dramatic increase in rooms cancellations was largely limited to Las Vegas because it alone had been added to the list of likely terrorist targets by Homeland Security Secretary Tom Ridge and mentioned in stories in The Washington Post and on Fox News and CNN.

R&R Partners Chief Executive Officer Billy Vassiliadis said the industry and the Las Vegas Convention and Visitors Authority had expected a higher level of cancellations because of the number of stories mentioning Las Vegas as a possible terrorist target.

"(However), I feel the numbers are not alarming," he said. "This is what happens every year ... and we'll end up rebooking and filling the rooms."

Among properties with rooms suddenly available, rates had been cut in half from earlier, Falcone said.

MGM Mirage spokeswoman Yvette Monet and Boyd Gaming Corp. spokesman Rob Stillwell both said the levels of cancellations are "not unusual" and that their hotels should be full by the holiday.

Park Place Entertainment Corp. spokesman Robert Stewart agreed and said all of his company's properties were fully booked.

Mandalay Resort Group spokesman John Marz said rooms had been opened at Mandalay Bay and The Hotel as part of their regular inventory management, and he expects all his company's properties to be sold out.

Falcone said most operators will still fill the bulk of their rooms, largely with discounting for drive-in visitors, and that only bad weather in the rest of the country will leave substantial numbers of rooms actually vacant.

Vassiliadis agreed some properties have been "room dumping," but added that they had tried to charge higher rates, which explained some of the severest room rate discounting.

However, University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said that if it's a broader problem affecting leisure travel, "it won't just be a one-week phenom. Hopefully, it'll just go away."

But he warned it could also prove to be similar to the severe acute respiratory syndrome in Asia earlier this year when millions of leisure travelers canceled vacation plans in response to media reports about the disease and the deaths of 300 individuals in China.

While the fear of terrorist attacks did not seem to be scaring away many visitors, they were much more concerned when deciding whether to travel to Las Vegas than they had been last summer.

In a survey of Las Vegas visitors now being conducted at the Grand Canal Shoppes at The Venetian, Las Vegas-based MRC Research Institute has found the proportion of Americans feeling the country is not safe from terrorism has doubled to 17 percent from 8 percent last summer, MRC Chief Executive Officer Jim Medick said.

And the proportion of visitors already here who feel Las Vegas is not very safe from terrorism has nearly tripled to 16 percent, up from 6 percent last summer, he said.

However, Medick warned that the numbers are "top-line data," and it will be impossible to interpret them accurately until the survey research has been completed.