Gaming, travel stocks dip after crash

Monday, Nov. 12, 2001 | 10:55 a.m.

line SUN STAFF AND WIRE REPORTS

Gaming and travel stocks headed lower this morning, as the nation awaited word on the cause of this morning's plane crash in New York.

Las Vegas' three largest casino operators -- Park Place Entertainment Corp., MGM MIRAGE and Mandalay Resort Group -- sold off sharply when news of the crash first reached investors. At their low points early this morning, Park Place was down 7 percent, Mandalay was off 7.8 percent, and MGM MIRAGE was down 4.3 percent.

Casino stocks, however, began recovering in late morning trading. By midday, Park Place was off 35 cents, or 4.3 percent, to $7.80, MGM MIRAGE was down 56 cents, or 2.3 percent, to $24.20, and Mandalay was down 33 cents, or 1.6 percent, to $20.05. Harrah's Entertainment Inc. dropped 19 cents to $31.51, and Station Casinos Inc. retreated 11 cents to $8.40.

Las Vegas' tourism economy has been recovering slowly but surely following the terrorist attacks of Sept. 11, but analysts have been fearful more terrorist activity could reverse that trend by discouraging travel.

Larry Klatzkin, gaming analyst with Jeffries & Co., said it appears today's events aren't related to terrorism. But without knowing for certain the cause of today's crash, it's hard to say how much effect today's events will have on that recovery, he said.

"If this is a terrorist thing, it's definitely going to affect flights," Klatzkin said. "If it's just an unfortunate accident, it should not have a major effect, but for people who were on the fence about whether they'd fly again, this may set them back a bit. A few people, who are nervous in general, may use this as an excuse not to fly again."

"We don't know what it is, but we know it's going to affect us to some extent," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "To the extent that this adds to the fear of the flying public, we'll feel it here, because we're dependent on the airport for visitors."

Ehlers believes tourism to Las Vegas will be affected, regardless of the cause of the crash.

"There's still a lot of people killed. It is still going to inhibit people, perhaps to a modest degree," Ehlers said. "People read headlines. People get scared. Some will say, 'That did it. We're not flying any more.' "

Airline and lodging stocks were the biggest losers in the Standard & Poor's 500 Index today on renewed concern that individuals and businesses would further curtail travel.

"In this kind of fear environment a lot of people are not interested in holding stocks," said Kevin Cronin, head of U.S. stock trading at AIM Management Group Inc., which oversees $125 billion in Houston. "This (selloff) is tame compared to what will happen if in fact it's a major terrorist event."

Stock of AMR Corp., parent of American Airlines, fell $2.53, or 14 percent, to $15.60. It has lost 47 percent since the Sept. 11 attacks. Northwest Airlines Corp. lost 82 cents, or 6 percent, to $12.72 and is down 35 percent since the attacks. Delta Air Lines Inc. lost $2.79, or 11 percent, to $23.20.

"Whether it's a terrorist act or some type of mechanical problem, it will be hard to get people comfortable to fly again," said fund manager John Waterman, who oversees $18 billion at Rittenhouse Financial Services in Radnor, Pa.

Starwood Hotels & Resorts Worldwide Inc., a big hotel owner, fell $1.32 to $22.90. Marriott International Inc., the biggest U.S. hotel company, shed $1.48 to $32.52. It has lost 20 percent since Sept. 11. Travelocity.com Inc., the largest Internet travel agency, fell $1.57 to $14. Expedia Inc. declined $1.50 to $29.72.

Carnival Corp., the No. 1 cruise line that has lost 21 percent since the attacks, declined $1.68 to $22.47. Royal Caribbean Cruises Ltd., down 48 percent in the last two months, fell $1.50 to $11.33. It is the second largest cruise line.

American International Group Inc. led insurance shares lower. Claims relating to the plane crash may hurt profits at insurance companies.

The Las Vegas Sun's David Strow and Bloomberg News contributed to this report.