For many, price isn’t right

By Liz Benston (contact)

Monday, March 13, 2006 | 7:16 a.m.

Myrna Huzan of Saskatchewan, Canada, has a strategy for how to find the best deals on the Strip.

"We do a lot of walking around," said Huzan, who stayed at the El Cortez hotel downtown and was exploring the north end of the Strip with her family on a recent afternoon. "(Deals) are getting harder to find."

Rising prices have forced Huzan, 65, and her family to pare down their regular trips to Vegas from about once every two years to once every four years.

Like many tourists who stay at cheaper hotels on the north side of town, the Strip has become a pricier, less inviting place for bargain hunters.

Things are about to get a lot more expensive.

Over the next five years, the Strip will undergo a building boom unprecedented in American history.

Some of these new projects will replace more affordable properties, accelerating a trend that has already pushed people like Huzan into a dwindling number of budget hotels on the Strip and even forced them off the Strip altogether and into downtown and suburban casinos.

As many as 40,000 hotel and condominium units - including at least five major casino resorts - are expected to be built by 2010. Some estimates say these projects will cost as much as $40 billion.

They include some of the most expensive, privately funded projects ever built in the United States, including MGM Mirage's $7 billion Project CityCenter and Boyd Gaming's $4 billion Echelon Place - each anticipated to include about 5,000 rooms.

Some are replacing historic properties such as the Stardust - places with loyal customers who return year after year but who can't afford more luxurious offerings.

None of the proposed offerings will cater to low rollers. There's higher profit margins in upscale properties, which are dictated by rising land prices and sky-high development costs.

Some suspect the lower end of the spectrum may be Aztar Corp.'s proposed $1.2 billion resort at the site of the Tropicana. Even that property, which may or may not be built depending on whether subcontractors can meet that budget, would be superior to existing middle-market casinos such as Luxor and Treasure Island.

The new projects will help cement Las Vegas' reputation as a preferred playground of the rich and famous - or those who aspire to be either.

That leaves middle-class customers - the vast majority of Las Vegas visitors - wondering whether they will be paying too much for an ever-dwindling number of budget hotel rooms. Some fear they will be priced off the Strip altogether.

Kathy Moen, 42, is among many tourists concerned that she might not be able to afford a decent place to stay in the future.

"And I don't know if I'll come back as often," said Moen, of Cedar Rapids, Iowa.

Moen stayed at Circus Circus with a friend last month, where she was able to find a hotel package for a reasonable price. But prices for other things, such as food, surprised her.

"Once we got down here I couldn't believe the prices," she said. "I don't need 'presentation' for food. I'm not going to gamble as much if I'm paying more for food."

Las Vegas has reason to care about Average Joes and Janes. The biggest percentage of Las Vegas visitors - 44 percent in 2004, according to the Las Vegas Convention and Visitors Authority - had household incomes between $40,000 and $80,000 per year. Last year's data isn't yet available.

Casino bosses say customers are willing to pay up for the Las Vegas experience - a vacation that's still reasonably priced relative to other big cities such as New York and Los Angeles.

There's no hard evidence that travelers have reduced their trips to Las Vegas. In fact, visitor numbers have climbed steadily even as room rates across the Las Vegas Valley have surged 34 percent since 2002.

Visitors are also spending more on every aspect of their trip, according to data from the Las Vegas Convention and Visitors Authority. Even money spent on gambling - a decreasing percentage of revenue for Strip casinos - has increased significantly.

Even so, there's plenty of anecdotal evidence that increased costs are pricing some consumers out of a Las Vegas vacation.

Some travel agents - who typically work with upper-middle-class travelers - say some Vegas regulars are taking fewer trips or are looking elsewhere for vacations.

Scott Pinheiro, president of Santa Cruz Travel in Santa Cruz, Calif., said rates at preferred hotels are becoming equal to if not higher than resort properties in Mexico and Hawaii.

"We do a lot of Reno packages now," he said. "People who are gamblers are going to go to Reno now more so than before. People who typically might do a four- to five-night vacation are looking at alternatives like Cabo San Lucas."

Surging demand on the weekends, when many California and Arizona residents drive in for quick stays, also make hotel rates difficult to swallow for the middle class.

"I think it's hard for the consumer to get their arms around the fact that a room can cost $299 and the next night it's $499 for the same room," Pinheiro said. "They get frustrated at that and then they start to look at other options."

Dan Lanser of A Plus Travel Adventures in Cleveland said his customers also are coming to Vegas less often.

"If they went three times a year, they're going twice a year," Lanser said. "They realize they have to spend more each time they go. They have money to spend but they don't want to throw it away."

About seven years ago, Las Vegas trips represented about 25 percent of the agency's sales. Now it's less than 5 percent - in large part due to price increases as well as the departure of several charter operations in Cleveland that couldn't fill enough seats to Las Vegas.

Lanser said customers are seeking out cheaper hotels on the Strip - or are going to closer casinos such as Casino Windsor across the Canadian border from Detroit.

Anthony Curtis, publisher of the Las Vegas Advisor newsletter, doesn't have much sympathy for consumers facing sticker shock.

"We're not the bargain we were in real terms but in relative terms it's still a hell of a bargain," said Curtis, who has tracked tourist trends in Las Vegas for more than 20 years.

There are still tens of thousands of lower-priced hotel rooms off the Strip but close enough to take in the sights, Curtis said.

"You've got to be willing to go a mile in either direction," he said.

These include big locals casinos and hybrid properties catering to locals and tourists, such as the Orleans and Silverton casinos.

"I don't worry that there won't be value here," Curtis said. "There are simply too many people coming here who need a value option. There are places that subsist on that business."

Besides hotel rates, the biggest price increases have been in things such as shows and buffets. Once a low-cost staple, many Strip properties have upgraded their buffet offerings with fancy decor, gourmet eats and live cooking stations - with some prices soaring over $20 per person.

Many customers have turned to Internet travel discounters to find the cheapest rates. Discounters typically buy blocks of rooms that don't sell because of cancellations or other reasons.

The travel sites dump them on the Internet at prices that are often much cheaper than the "rack rate" customers get when they book rooms directly through the hotels.

Many travelers are finding reasonable room rates midweek and are planning further ahead to lock in rates, said Nicole Hockin, a travel expert for Hotels.com in Denver.

Visitors also are staying at cheaper hotels and enjoying amenities at more expensive properties next door or a block away, she said.

For Hope Wallace, a travel agent in Casa Grande, Ariz., the luxury hotels are a boon for about 10 percent of her customers.

"They're tickled and excited that they have more luxury properties to stay in than before," she said.

The other 90 percent are often disappointed.

"We have to change their mind-set that they're going to be able to come to Vegas for $500," Wallace said. "That just doesn't exist anymore. It takes a long time to explain that 9/11 was a long time ago and that they're building all these luxury towers now."

More customers are leaving their children behind, which cuts down on costs because food and entertainment prices have gone up, she said.

Others are ditching Las Vegas for Laughlin, where rooms often go for $20 to $30 a night.

For middle-income travelers, Las Vegas is still appealing yet less accessible than it once was.

Marie Morse of Lafayette, Ind., gravitates toward middle-market properties and avoids the more expensive hotels, such as Caesars and Bellagio.

She stayed at the Flamingo last month, which she calls "a little dated for the price."

"I'd like to stay (at more expensive resorts) but not for what they want for it," Morse, 49, said. "I can't think it's worth it if you're not in your room much."