Complacency could hurt Nevada gaming

Thursday, Dec. 4, 1997 | 11:04 a.m.

The Southern Nevada casino industry can't get "fat, dumb and happy" about being the premier gaming resort destination in the world if it expects to stay on top.

Keith Schwer, director of the Center for Business and Economic Research at UNLV, outlined the strengths, weaknesses, opportunities and threats to the region's economy in a presentation on Tuesday. He highlighted one portion of a broader picture painted by Federal Reserve economists explaining the Fed's role in the economy.

One of the biggest weaknesses in Southern Nevada's economic profile, Schwer said, is the potential to become complacent. Scwher cited Detroit's automotive industry as an example of a dominant economic force that collectively thought it was invincible against Japanese competition. He drew the parallel that Las Vegas has taken the dominant position among the world's gaming resorts and must protect its competitive advantage.

Ironically, Schwer noted, Detroit is now diversifying its own economy by becoming a gaming destination.

Other potential weaknesses in the Las Vegas economy: other gaming venues catching up by learning Nevada's secrets, "bad" service and image and a lack of diversification in the economy.

Schwer also said Las Vegas must continue to adapt to visitors' changing tastes to keep them returning to the city. He also said one visitor's bad experience with service can do considerable harm overall and every representative of the industry has to stay aware of that.

Other cities that offer gaming are catching up to Nevada because locally trained executives are transferring with their companies to places like Atlantic City and Mississippi.

For each weakness, Las Vegas has a matching strength. Schwer listed the size of the economy, being No. 1 in gaming and having a world-famous name recognition as big pluses for Las Vegas' economy. He also cited the city's airport infrastructure and its unique location near the Grand Canyon.

Schwer noted that the Grand Canyon air tourism controversy has "become a pocketbook issue for Las Vegas" since 15 percent of the city's visitors are midweek visitors from foreign countries, many of them wanting to take flights over the Grand Canyon in their visit to the American Southwest.

President Clinton directed the National Park Service to restore natural quiet to the Grand Canyon and efforts by the Interior Department to restrict flights have been criticized by tour operators.

As for being No. 1 in gaming, "being first counts," Schwer said.

"It took us 50 years to learn how to do it right," Scwher said of the gaming industry. "Then you look at some of the problems other places are having. Louisiana is the only banana republic among the 50 states.

"But we don't want to draw the conclusion that we are the only ones who can do it and that we're home free. Watch out for Mississippi."

The biggest threats to destabilizing the local economy, Schwer said, are the proposed federal taxation and regulation of gaming, overbuilding, computer gaming and the loss of local environmental quality.

He said the biggest opportunities the city has going for it are the merging of Hollywood with Las Vegas, a general can-do attitude shown by the entrepreneurs of the area and the momentum growth offers.