Sunday, Feb. 17, 2008 | 2 a.m.
Now is the time for all the Chicken Littles to come out of the coop and start warning Las Vegans about the falling sky.
As if the extended housing slump, credit crunch, skyrocketing utility costs, high gasoline prices and a possible national recession aren’t enough to worry about.
Not to mention the drought.
But the Chicken Littles can’t help themselves when it comes to resort construction on the Strip.
Steve Wynn was a fool to build the Mirage, folks said before the first modern megaresort opened in 1989.
“He’ll have to take in a million dollars a day,” they clucked.
He did much better than that.
The hand-wringers didn’t learn and were back at it again in 1993, worrying that the lump-sum addition of 11,000 hotel rooms at the MGM Grand, the Luxor and Treasure Island would surely mean far too much capacity for the market to absorb.
And the Chicken Littles continued cackling through the rest of the ’90s as the Monte Carlo, New York-New York, the Bellagio, Mandalay Bay, the Venetian and Paris Las Vegas added nearly 20,000 rooms. They worried about whether there were enough flights to allow folks to get here.
The new resorts were interesting enough to inspire people to come here for the first time or excite seasoned visitors to come again, and total annual visits grew enough each year to more than compensate for the bubble of new capacity.
Until the Palazzo at the end of December, we’ve had only one new Strip resort since 2000 — Wynn Las Vegas, and it led the way to a new luxury trend on the Strip as the market set new records for average daily hotel room rates and room occupancy every year.
The success of the Bellagio and the Wynn are fueling the next wave of projects.
With Encore slated to open in about a year, CityCenter and Fontainebleau scheduled to open by the end of 2009 and Echelon on track to open in the third quarter of 2010, there is a ton of capacity under construction.
They are all ultra high-end hotels. And CityCenter, with its Harmon and Mandarin Oriental, and Echelon, with its Delano, Mondrian and Shangri-La brands, will add boutique hotel towers to their array of luxury rooms.
Wall Street is notoriously fickle when it comes to the kind of gamble made by swashbucklers such as Kirk Kerkorian, Sheldon Adelson, Bill Boyd and Steve Wynn.
More focused on quarter-to-quarter balance sheet improvement than on building awesome new resorts that will capture the public’s fancy, Wall Street worrywarts and other Chicken Littles are already beginning to come out of the woodwork, apprehensive about whether the next wave of building is just too much for the market to absorb.
But I’ve seen the beautiful new suites at Encore, and we all can see the crystalline CityCenter hotel tower rising in the middle of that project. Plans for Fontainebleau and Echelon seem similarly fantastic.
We can’t know for certain whether the luxury market can expand rapidly enough to allow all the new resorts to thrive, but if we were to make a bet on the future, I think it’s a big favorite that they will.
Ignore the clucks of the Chicken Littles and be confident in the men who are betting their own billions on the future of Las Vegas.
These guys know what they’re doing.