LV occupancy rising, rates remain depressed

Thursday, Sept. 27, 2001 | 11:07 a.m.

Occupancy is rising but room rates at major Strip hotel-casinos will remain depressed well into October, says a survey issued by the Wall Street investment house Bear Stearns this morning.

Bear Stearns gaming analyst Jason Ader said there are encouraging signs for the city -- most notably, that demand for rooms at the lower prices is heavy, and that occupancy levels this weekend will be above 90 percent at several Strip properties, "albeit at lower room rates."

The average Las Vegas Strip hotel room is going for $194 the weekend of Oct. 20, a 24.1 percent decline from one year ago. During the middle of this week, rooms are going for $97, down 45 percent. Weekday room rates will probably remain low, Ader said, because of convention cancellations and lower drive-in visitation during midweek periods.

The most severe weekend decline was reported by MGM MIRAGE's six Las Vegas properties. Although they were still the city's highest with a $271 average rate, this number was still down 41 percent from the year ago period. Mandalay Resort Group properties posted an average weekend rate of $266, down 18.4 percent, while Park Place properties were at $245, down 9.7 percent.

It is essentially a return to old Las Vegas, Ader noted -- selling rooms at any price to get people in a property, then making it up on the casino floor or through other sales.

"We believe that once people are actually in the resorts, they will begin to spend on gaming, food and ... entertainment at more normalized levels, although this could take some time to ramp up," Ader wrote. "There could also be some psychological benefit to people perceiving they got a 'deal' on a room in Las Vegas, which may lead to higher spending in other areas, particularly on the gaming floor."