Experts: High gas prices could have long-term effect on Vegas

Friday, Sept. 2, 2005 | 11:03 a.m.

The spike in gasoline prices in the wake of Hurricane Katrina isn't discouraging tourism traffic to Southern Nevada -- yet.

But experts say it may not be long before the pain at the pump translates into would-be visitors staying home.

A spot check of Southern Nevada resorts indicates there hasn't been a mass exodus to the cancellation desk for the three-day Labor Day weekend.

Still, industry observers say they aren't as sure as they were a week ago that soaring gasoline prices won't have an effect on future out-of-town excursions to Las Vegas.

"In the short run, I don't see it happening," said Anthony Curtis, who publishes the Las Vegas Advisor newsletter for tourists. "We're definitely going to hit a point where people are going to say, 'Phooey,' something's got to give and that long trip across the desert might be it."

Curtis said Labor Day weekend visitors probably would "gut it out" for now.

"But if this continues (fuel prices keep rising), you might start to see that effect," Curtis said.

In the month of August, the average price of a gallon of regular unleaded gasoline in Las Vegas climbed from $2.47 to $2.72, according to the vegasgasprices.com Internet site. Nationally, the average went from $2.28 to $2.84 a gallon during the same period.

But with the shut-down of refineries and damage to oil pipelines following the devastating hurricane that has left the Gulf Coast in shambles, gas prices were expected to climb even higher. There were reports of gasoline prices in excess of $5 a gallon in some parts of the South following the storm.

Prior to the hurricane, a spokesman for AAA Nevada said he expected travel to be up for the Labor Day weekend, according to an agency survey.

"We expected travel would be up slightly, but now, I'd say the numbers may not come in as high as we expected," said Michael Geeser of AAA.

Asked if the price spike that accompanied Katrina would result in some people staying home for the holiday that traditionally marks the end of summer vacation, Geeser concurred that would be "an accurate assessment."

"This is an example of how closely we are tied to the global economic chain of crude oil," Geeser said. "We're often asked how a strike in Nigeria or an incident in Russia could have an effect on us here."

Geeser said the ripple effect of the hurricane is what's behind the skyrocketing price of fuel and it's a classic example of supply and demand.

"The supply (of crude oil) is there," he said, "but what we don't have is the process in the middle to refine it."

Prior to the hurricane, AAA projected that nearly 250,000 Nevadans would travel by motor vehicle, a 1.9 percent increase over last year, and air travel was expected to increase by 5.7 percent to more than 53,000 Nevadans traveling by plane. Another 15,000 people were expected to travel by trains, buses or other modes of transportation.

Nationally, AAA projected that 34.5 million people were going to travel during the Labor Day weekend.

But all bets are off now. A telephone survey of 1,300 adults by the Travel Industry Association of America on behalf of AAA was conducted prior to the hurricane. Geeser said there's no new data on which to make a prediction of how the aftermath of the storm would affect travel.

The Las Vegas Convention and Visitors Authority expects 286,000 people will visit the city over the Labor Day weekend in spite of spiking gas prices in recent weeks.

That's 3 percent more people than visited a year ago.

The occupancy rate for the Las Vegas Valley is expected to be about 94 percent over Labor Day compared with 95 percent a year earlier.

The 2,700-room Wynn Las Vegas and a 949-room hotel tower at Caesars Palace recently opened, adding about 3,650 more rooms from last year for a total of 133,612 rooms in the Las Vegas Valley.

The visitors are expected to spend about $178.7 million while they are in town, not including gambling. That's 7 percent more than visitors spent a year ago.

Those traffic estimates are conservative, LVCVA Senior Research Analyst John Piet said.

About 278,850 people visited the city over the three-day weekend last year, well above last year's projections of 271,000 people.

Representatives of local resorts say their hotels are at or near capacity.

"A large percentage of our guests are coming from California," Yvette Monet, a spokeswoman for MGM Mirage, said Thursday. "We haven't seen any impact here due to higher gas prices. When our guests have a vacation budget, they factor in the considerable cost of gasoline and they typically don't change plans."

MGM Mirage expects a boost with a Saturday concert by John Mellencamp and John Fogerty at the Mandalay Bay Events Center and a Sunday performance by Aretha Franklin in the MGM Grand Garden.

"We haven't seen any (cancellation) spiking or anything unusual," added Ira David Sternberg, a spokesman for the Las Vegas Hilton.

His property is playing host to the Jerry Lewis MDA Telethon, which is going to devote some of its time to raising disaster relief funds for hurricane victims.

Officials at McCarran International Airport are expecting 672,000 people to use the airport today through Tuesday.

The two dominant airlines serving McCarran, Southwest and America West, each offer a single nonstop round trip between Las Vegas and New Orleans, one of the cities hardest hit by the hurricane.

America West is waiving the $100 fee to change reservations for passengers holding reservations to New Orleans through Wednesday. The airline is recommending flights to Houston or Memphis as alternative destinations.

Southwest announced it would allow free changes for any travel booked through Sept. 30 and persons holding tickets for flights through Sept. 12 can get a refund. The airline is staying away from New Orleans through that date and recommends flights to Houston; Nashville, Tenn.; Birmingham, Ala.; or Jackson, Miss., as alternatives.