Down and out in Las Vegas

The good-time capital of the US has hit a losing streak. Guy Adams reports on an epidemic of bankruptcies, foreclosures and mass lay-offs

Saturday, 5 July 2008

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With Americans cutting back on luxuries, and the price of transport rocketing, the so-called "Vegas vacation" is facing the axe. This week, as the nation celebrated Independence Day, major hotels were taking stock of a fall in all-important room occupancy rates from their usually impressive 95 per cent levels to nearer 80 per cent.

More worryingly, new figures showed gambling revenue has also dropped – a further 3 per cent this month – starting a price war between worried firms anxious to lure punters back. Hotel rooms, which last year averaged $130 each, now go for less than $100 (£50).

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"This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.

"We've seen a drop in custom here too: maybe 180 people coming in when before we got 200. It's a difficult business, but the girls still have to make a living. We will survive because we own our own premises, we have a good name and location, we don't buy on credit, and we've been around for a long time. But we're very lucky in that respect."

To quantify the Vegas slump, look to the stock market. Shares in casino operators, the engine room of an economy reliant on its liberal attitude to public morality, have been haemmoraging value like a down-on-his-luck gambler.

Las Vegas Sands, which controls the Venetian and Palazzo resorts on the famous neon-lit Strip that runs through a "miracle mile," has dropped below $50 a share, a third of its value last September. MGM is at $28, from over $100 a year ago. Wynn resorts, owned by the ebullient billionaire Steve Wynn – a Texan version of Donald Trump – neared $70, from almost $180 last year.

This week, in an attempt to prevent financial meltdown, Nevada's Tourism Alliance convened an "Air Crisis Briefing" in an effort to prevent airline plans to halve the number of flights to the resort. The city's gut-busting "eat all you can" buffets are also being scaled back to account for the US's 4 per cent food inflation. Where a long queue of obesity once trailed across The Bellagio hotel restaurant's ornate carpets, demand for its famous (but now pricey) lunch buffet had on Thursday slowed to a trickle. In what sounds suspiciously like a panic measure, the Golden Gate Hotel this month even said it was doubling the price of its signature 99 cent shrimp cocktail.