Analysts confident fuel price hikes won’t hurt LV

David Strow

Tuesday, Feb. 15, 2000 | 10:42 a.m.

Though oil prices are soaring to their highest levels in 10 years, most analysts and local officials are confident Las Vegas visitors aren't about to stay away in droves.

"I just don't see it," said Stuart Linde, gaming analyst with Lehman Bros. "If the economy is really bad, and you have high prices, that could hurt. But as long as the economy is good, I don't think you'll have a dramatic impact."

Tourism officials have been dealing with the issue of rising fuel costs for some time. In January, these costs caused airlines to tack on a $20 fuel surcharge to round-trip tickets. With fuel costs soaring, it's possible these surcharges might not be the last.

And gasoline prices continue to rise, making the drive from such feeder markets as California and Arizona more and more expensive.

Bill Mahaffey, manager of transportation at the Las Vegas Convention and Visitors Authority, doesn't think further surcharges will be enough to reverse the rapid growth at McCarran International Airport in 1999.

"The economy of our nation today is such that the traveling public has more discretionary money than they've ever had," Mahaffey said. "Yes, it's going to cost me $20 or $30 more. But the tourists are going to come.

"Right now, the airline emergency issues (related to the recent Alaska Airlines crash) will be more of a deterrent in the short term than fuel costs."

That's primarily because airline tickets to Las Vegas are cheaper than they are for most other destinations, Linde said.

"That market is a low-yield market, and everyone knows it," Linde said. "When people come to Las Vegas, they know they're going to gamble. So they're not going to pay a lot for an airline ticket.

"I think it will be insignificant on the driving side. I don't view (gas prices) as an issue."

Still, as gas and airline ticket prices inch up, demand for Las Vegas trips will be reduced, said Dave Ehlers, chairman of Las Vegas Investment Advisors.

"If it gets to the point where the price of a Las Vegas air trip rises by $50, I think that's something that would begin to affect demand, but not greatly ... maybe 5 or 8 percent," Ehlers said. "This isn't something that's going to shut down Las Vegas.

"To the extent that gas prices go up ... it can only reduce demand. If we got a catastrophic increase, you could see something catastrophic (in visitor numbers)."