Analysts optimistic despite decline in LV visitors

Lisa Snedeker

Thursday, March 28, 2002 | 11:14 a.m.

Despite a continuing six-month trend of fewer visitors on the Las Vegas Strip, Wall Street analysts are encouraged by newly released figures for January that mark the city's narrowest decline in tourism since Sept. 11.

The trend is "clearly showing the continued rebound in the Las Vegas market," said Wall Street gambling analyst Jason Ader of Bear Stearns Co. in New York.

Visitor volume was off nearly 5 percent to 2.67 million visitors in January compared with January 2001, according to Las Vegas Convention and Visitors Authority statistics.

Figures show the visitor decline has been leveling since the terrorist attacks, said Kevin Bagger, the authority's senior researcher.

"The resiliency of Las Vegas is historic and so far, it seems to be resilient again," Bagger said.

An estimated 15,000 Strip workers were laid off after the attacks because of the dramatic drop in tourism.

In September visitor numbers were down 14 percent compared with the previous year. Visitors were down about 8 percent in October and November. In December visitor counts were down 6 percent.

Bagger attributed the slowing visitor decline to a general travel and economic turnaround since the terrorist attacks and to aggressive marketing.

Occupancy rates for the city's 126,667 hotel rooms were down nearly 5 percentage points to about 75 percent overall in January compared with the previous year.

The empty hotel rooms were linked to a nearly 10 percent decline in air travel through McCarran International Airport in January. McCarran brings in about 46 percent of Las Vegas' tourists each year.

"The decline in air travel is being partially offset by an increase in auto traffic, which is up 11.4 percent," Bagger said. "It mirrors what's going on in many parts of the United States, where people are driving versus flying."

Spending patterns of Las Vegas visitors continued to fluctuate in January, Bagger added.

Las Vegas gambling revenues also were off in January by nearly 20 percent and convention attendance was down nearly 6 percent with a corresponding 5 percent decline in economic impact.

Analysts predict the visitor numbers for February could be improved due to the Super Bowl and a strong President's Day weekend.

"We expect sequential monthly visitation improvement to continue throughout 2002," Ader said.

As a result, Bear Stearns on Wednesday raised its first quarter earnings predictions for a number of gambling corporations -- including MGM MIRAGE, Harrah's Entertainment Inc., Park Place Entertainment Corp. and Ameristar Casinos Inc. -- to exceed current consensus estimates for the quarter ending March 31.

"Both Boyd Gaming and Station Casinos have already pre-reported better-than-expected first quarter results last week," Ader wrote investors. "We believe the potential exists for many of these companies to report additional upside above our recently revised estimates."

The improved earnings estimates are being driven by better marketing programs; continued strength in the regional markets; mild weather; and lower utility and gasoline prices, among others, Ader said.

Gasoline prices, while headed upwards, are lower than a year ago.