Updated Las Vegas info.

Not sure if everyone is aware of this:

Boyd Gaming Corp. recently postponed work on its $4.8 billion Echelon resort in Las Vegas. The Las Vegas-based company, whose ratings were lowered by Moody's last week, also suspended its annual cash common dividend. They have a steel framed building up and that is all that will be completed for the next 6 to 12 months. Bet Vegas gov’t officials were happy to see that! NOT!

MGM Mirage announced wednesday they weren’t going to give out bonuses & their ratings were cut. Meantime, Kirk Kerkorian sold his Ford stake to protect his majority stake in MGM. Rumor has it that he needs to raise more $$$ to finish the CityCenter project so he’ll put $$$ to work with foreign investors.

Then, wednesday as well, LVS sands says that they need to raise a BOATLOAD of $$$$ ($2 billion) to finish their Macau (Cotai strip) property. Adelson, the CEO, thinks banks over there will be more receptive than U.S. banks. The Cotai Strip project in Macau, due to be completed in 2011, is to include retail malls plus hotels that will be operated by some of the biggest names in hospitality, such as Sheraton, St. Regis, Hilton, Conrad, Shangri-La and Traders.

http://biz.yahoo.com/ap/081022/las_vegas_sands_adelson.html?.v=1

Dan

MGM Not Giving Bonuses this year / Ratings Cut

I've been saying for awhile that Casinos (namely Vegas) were going to be trading down and impacted negatively in a big way ever since I went there in January and to Tahoe in February.

http://betterbizbooks.blogspot.com/2008/04/moreless-freebies-in-2008-from-casinos.html

To me, the rooms were too expensive, the food was too expensive and the freebies/comps. were going down the toilet. I expect a certain level and what I got vs. prior years was same quality and MORE expenive due to high occupancy rates. Given that the consumer was stretched, that the economy was declining, I was cautious about Vegas.

Well, yesterday MGM announced they were unlikely to give performance bonuses due to weak results. Then today their rating got cut and the stock price got pummelled. At the same time, Kirk Kerkorian announced he was going to sell his Ford Stake at a HUGE multibillion loss yesterday. Jim Cramer seems to think it is a defensive move given the decline in MGM stock and Kirk's 50%+ stake in the company. If he needs to raise capital to complete the 4800 hotel room / 2800 condo/hotel room City Center Project he will need to inject capital of his own into the company to maintain that majority ownership.



http://www.cnbc.com/id/27293136/?for=cnbc

As you can see from the stock charts neither have done well and, with things getting worse in the economy, I don't see things picking up anytime soon.



MPEL, for what it is worth, said they have enough cash on hand to finish the first two phases of their ENORMOUS project in Macau, City of Dreams. Their stock continues to languish. MPEL shares have bounced off their lows at $2.30 to close today at $4.15 (nearly a 100% bounce). I am still taking a "wait and see" attitude on MPEL as I don't see the stock price bouncing notably higher if MGM keeps on tanking.

http://biz.yahoo.com/ap/081017/melco_crown_dreams.html?.v=1

Last week a major casino developer announced they were going to stop progress on a casino project in Vegas. Most of the steelwork is done but they still are delaying it by 6 months to a year due to funding concerns and overall concerns re: the economy and filling rooms, etc. When casinos aren't getting finished in Vegas you know things are tough!

Oh, and today Harrahs announced completion of the 6th tower at Caesars Palace and they are finishing up their convention center there as well. Caesars, from what I have been told, is the most expensive casino ($$$ spent developing/renovating) in all of Las Vegas. It is regarded as the PREMIER property in Vegas for Harrahs.

http://biz.yahoo.com/ap/081021/nv_harrah_s_caesars_palace.html?.v=1

Dan Ross
http://www.BetterBizIdeas.com/

Vegas needs a new airport terminal ???

I've been hounding for awhile that Vegas traffic was really going to get hit during this economic downturn. Rooms are more expensive than ever, restaurants aren't cheap and it seems like it takes a miracle to find a blackjack table under $10 on the strip at times.

Anyway, from http://www.thestreet.com/

http://www.thestreet.com/story/10436739/1/airlines-hotels-clash-over-vegas-airport.html?puc=_htmlbooyah

"Las Vegas, a city built for visitors, is ground zero in the airline industry's effort to cut back on marginally profitable flights. But the city's powerful hoteliers are none too happy about the cutbacks. They still want the carriers to finance a new airport terminal, which is needed to support 32,000 additional hotel rooms slated to open by 2012. The timing is unfortunate. Traffic at McCarran International Airport fell 8.6% in July, compared with the same month a year earlier. In fact, traffic has fallen every month this year, except for February, which had the benefit of leap day in 2008. And the airlines aren't finished cutting. "

Oddly enough, I was talking last night with my mother re: her pending trip and she had indicated that Southwest Airlines was cutting one flight (out of two daily) that fly direct to Vegas from where she lives....

Dan Ross
http://www.BetterBizIdeas.com

Vegas going into the Toilet - Another disturbing datapoint

I just got back from Vegas earlier this week and I thought business was off a bit. The tables didn't seem as full, restaurants, pool areas, etc.

Then I find the below info. earlier today:

http://www.lasvegasadvisor.com/whatsnews.cfm#3471

* September 11, 2008 Vegas Visitation Down in July Not since the start of the Iraq War, over five years ago, have visitation levels to Vegas fallen as low as they did in July, according to numbers released yesterday by the Las Vegas Convention & Visitors Authority. Room rates were off 10% from July '07, while visitation was down 5%, as hotel occupancy, hovering around 88%. More conventions were held, but conventioneers curtailed their stays.

* September 10, 2008 NV Down -13% in July Comparison to a very robust July 2007 gives this year's July casino-revenue numbers a difficult act to follow, resulting in declines that are way above average for the year to date. Measured against last year, the state was -13% overall, with Strip slot revenues, table win and baccarat win -8%, 21% and -26%, respectively. Most Clark County jurisdictions experienced very adverse comparisons, with the Boulder Strip and North Las Vegas having the worst of it. By contrast, Reno was only off 1% and the unpredictable South Tahoe area noted an 11% increase. July's numbers mark seven straight months of decline for Nevada casinos. As far as trends go, table and baccarat drop swing back and forth, but slot handle on the Strip is further and further off last year's pace.

Dan Ross
http://www.BetterBizIdeas.com

Vegas going into the Toilet - Another disturbing datapoint

I've been stating for awhile (Feb & April posts) that I expected Vegas to really get hit by this consumer slowdown. It seemed to me, the last two times I have gone, that it was increasingly more and more expensive to go there and nothing was free anymore. Hotels weren't cheap, cheap dining options were dwindling, freebies (comps) were down, etc. Don't get me wrong, I think there are tons of cool new options but, as their costs are higher than historic levels, they pass it along so they can make $$$.

Here is some supporting data

http://www.lasvegasvegas.com/

Nevada gaming is seemingly in a freefall, earning 15.2 percent less in May 2008 than in May 2007. Put another way, it's the worst May in 10 years. The decline is across the board, with the Strip at 16.4 percent less, downtown at 17.3 percent less, Mesquite at 3.2 percent less, North Las Vegas at 29.4 percent less, and Boulder Strip at a whopping 30.2 percent less.

Gambling on tables and slots were shown to be down approximately the same amount, at 15.7 and 15.1 percent, respectively.

In table games, blackjack was down 26.2 percent, craps was down 7.3 percent, roulette was down 27.7 percent, and baccarat was down 0.6 percent.

The downturn also equates to less tax money going to the state, almost $19 million less. Either taxes go up or spending gets cut...

Dan Ross
http://www.BetterBizIdeas.com

Gaming in Asia - Long-term Trends/Analysis on CNBC

http://www.cnbc.com/id/15840232?video=758325268

At the end of the day I DISASGREE with this guy. I find it ironic that the AGA (American) is commenting on Macau. Doesn't he have a vested interest? LOL

Asians like table games and probably will move towards MORE but I think they will remain heavily table based. I personally find more women play slots/machine games vs. table games so, as that segment of the economy starts to earn more there might be greater long-term potential.

I think most Americans are TIRED of ZERO freebies in Vegas and that is one reason why Vegas will be hurt MORE this time vs. previous slowdowns. Why?

1) The middle class can't afford the "fine dining." I fine that most people I talk to just want better "normal, affordable food/selections." When I was in Vegas earlier this year I would NOT have met this demographic as I wanted my girlfriend to enjoy the experience. We ate at many nice restaurants and took in shows every night but the bill was STEEP! She noticed it and, when we went to Tahoe a month later to ski everything was a bit lower key.
2) Airfares are through the roof so, even if you give someone a free room they have to get there!
3) When people get there they can't afford as much due to higher debt levels than previous recessions/slowdowns.
4) At some pointt the American casinos will eventually figure out that people want more VALUE (bang for the buck). The way to maximize profits is to FILL IN ROOMS, which generate gambling revenues and food sales. We'll see how it plays out......

Finally, the way to play Macau gaming is Wynn Resorts (Ticker: WYNN), MGM (MGM) and Sands(LVS). I've been told that, of the three, the Sands (Venetian) is BAR NONE the most comparable to Vegas.

Dan Ross
http://www.BetterBizBooks.com

MGM Mirage laying off 400 managers

http://biz.yahoo.com/ap/080414/mgm_mirage_layoffs.html

Well, I hate to say it but this was inevitable and could have been seen a mile away. I've been predicting this for a solid 1-2 months now re: an economic slowdown and it impacting Vegas and the Casinos.

What I am wondering is, how will this impact WSOP 2008 turnout? This is the first economic downturn that the poker boom has seen since MoneyMaker won the WSOP back in 2003.

Dan Ross
http://BetterBizBooks.com/

Interesting site to take a look at folks
http://www.pokerati.com/

Additional Datapoints re: Vegas and their economy...

The worst hit real estate market Y-Y, tying Miami at down 19% (case shiller index).

Then we look at traffic stats ßinteresting which carriers bring tourists to Vegas. I’d be amazed if traffic held up over the long-term with this economy doing as poorly as it is….

http://cms.mccarran.com/dsweb/Get/Document-219570

Trump not breaking ground on second tower…
http://www.lvrj.com/business/17334999.html

Financing is hurting development of new towers – DUH! – One deal was 80% sold with 20% non-refundable deposits and still couldn’t get going…..
http://www.lvrj.com/business/16776061.html

Dan Ross
http://www.BetterBizBooks.com

More/Less Freebies in 2008 from Casinos?

http://news.yahoo.com/s/ap/20080406/ap_on_bi_ge/casino_comps

My Take: I always love it when a writer choses ATLANTIC city to be representative of the Casino industry? They made $$$ when NYC was there and they were the only ones to get NYC $$$. While that city sees Y-Y declines or flat revenue (from gambling) other markets climb Y-Y and new markets open up.....Talk about pathetic.

The real issue here: With the economy going into the toilet do comps go up or down in Vegas/other areas in 2008? Your opinion?

I personally think they go up SIGNIFICANTLY as people's disposable cash flow is getting crushed right now. Eventually people will figure out that, they need to get people there for them to spend $$$. Hotel room prices need to come down, more freebies need to happen and, with airline prices being through the roof, it wouldn't surprise me to see NEGATIVE or very concerning numbers from Vegas within 3-6 months.

Alot of tourism comes from CA in Vegas. Well, last I checked that economy and FL were getting crushed as people can't use their homes as an ATM anymore.

Dan Ross
http://BetterBizBooks.com/