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Friday, Jan. 30, 2009 | 6:38 p.m.
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More bad news affecting Las Vegas' economy came out of two reports released Friday: Financial analysts are saying 2008 gaming revenues for Nevada and the rest of the country are down and that Las Vegas casinos are piling up significantly more debt.
Fitch Ratings, a global credit ratings agency, said U.S. and Nevada commercial and racetrack casino revenues fell 3.5 percent in 2008 to an estimated $36.2 billion. Fitch said the rating would have been much worse if not for emerging markets like Pennsylvania and New York. The declines since September were notably worse than the full year, Fitch said.
In Fitch’s 2009 gaming outlook report released in December, the agency said the U.S. gaming industry will remain under significant pressure in 2009 and will likely recover in 2010. Fitch expects overall consumer spending to drop by 1.6 percent in 2009 and remain soft until 2010.
Seven gaming companies defaulted on more than $13 billion of high yield principal in 2008 due to heavy debt loads, a difficult credit market and strained liquidity, Fitch said. Station Casinos may soon join that group as it is on the cusp of defaulting on an additional $2.3 billion after its failed debt exchange offer in December.
Jefferies & Company, an investment bank and securities firm, said Las Vegas casino operators like Hooters, Fontainebleau, Black Gaming, Cosmopolitan and Herbst (owners of the Terribles chain) are at a higher risk for defaulting on loans. Harrah’s and Station Casinos are at an even higher risk, Jefferies & Company says.
Leverage in every Nevada gaming market is the highest it has been in 17 years, the firm said in its Friday report.
Jefferies & Company reported in the Nevada fiscal year, average Strip casino net debt jumped from $391 million in 2007 to $773.4 million in 2008. Average Las Vegas Downtown casino debt rose to $92.9 million from $6.7 million in 2007. Jefferies & Company said debt significantly rose related to the building of CityCenter, Encore, Cosmopolitan, Fontainebleau and privatization of Harrah’s.
Boomers' retirement portfolio's have been decimated by the stock market crash which may mean significant belt tightening by this very large formerly free spending group. Logic would suggest that this is bad news for resorts such as Las Vegas. If it takes years to get the retirement nest egg back this may mean years of hard times for Las Vegas. The high leverage level of the gaming industry coupled with the above could result in large numbers of bankruptcies of the biggest employers in the area. These bankruptcies could further cripple banking which could lead to a further downward spiral of the corporate economy. Times may be tough for a long time and corporate America may not have any answers.
Hello everyone
I remember my first trips to Vegas in the late 80s and early 90s. The big casinos on the Strip were mostly under construction but there were so many little ones, operated by companies that no longer exist. Can't even remember all of those cascinos. One of them was the Key Largo, ShowBoat (later called Castaways), Vegas World (before it turned into Stratosphere Tower), etc. These casinos, together with the old style casinos in downtown, gave a little touch of how it once used to be. The Mega Resorts such as MGM Grand , Venetian, Excalibur, all casinos for the masses, are different. If no masses keep flowing into Vegas and Vegas residents don't have the money to spend, then the big casinos overloaded with debt are in trouble. That's no news to nobody, of course. In this credit crunch, people with tight bankrolls have to be careful and spend less to make ends meet. The first thing you tighten up with, that's luxury items and of course, leisure, gaming, etc. No wonder that casino revenues keep dropping.
For me as a tourist, it's a little advantage to see that hotel rates keep dropping. However, they only keep going down sharply during the week whereas it's still quite expensive on Saturday nights. The financial crisis we're all in together will probably not clear up so soon. Some say it will take until 2010 before it gets better. Others predict the beginning of the worst depression we have seen. I don't know. However, there are a few ways for the not-so-much-debt-loaded-casinos to attract customers. Lower the table limits, loosen up the slots and come up with more full pay videopoker machines at lower denomination. In the end, what's better for the casino: Empty rows of tight slots and empty tables or people having fun at a lower level? Same applies to restaurants and buffets. We don't need the most expensive seafood on Thursday night. In the end, too much food is bad for the health. All it takes is good food at good rates. This keeps me coming. After all, when I spend my days at the El Cortez and Binions Coffee Shop, I miss the good old days when Downtown Vegas was a great place to go and gamble. Too bad that the big corporations took over and greed led into this debt-debacle. Now that the masses are no longer coming, who's going to pay for all that?
My wife and I just returned from Las Vegas.
We had a wonderful stay at the "Palazzo".
While their we seen "Jersey Boy's"
It was enjoyable but some of the language was not necessary.
The traffic on Las Vegas was wonderful.
If it were not for the taxi cabs and buses you could make it from Mandalay Bay to the Venitian in 10-15 minutes.
All the casino's were like tombs.
It was a photographers dream come true.
No one would be standing in your shots.
The reality of this financial problem is cost of overhead to keep the doors open. I predict we will soon see the day when selected casino's will be closed on certain days of the week. This seems to be a logical temporary solution. At least until things get better for discretionary public spending market.
Do not expect the Californians to bail this problem out. Escpecially when we see the Indian Casino's raising the bar. New beautiful hotels offering $49.00 a night.
The entertainment has gotten classy in new showrooms.
The table game player has started to play 3 or more times a week rather than once a week.
The Senior's new hobby has turned to playing the slots most every day to acquire points for free buffet type food.
In the Palm Springs area we have (5)Indian casino's to choose from. "That's Gotta Hurt Vegas".
The Indians have won this battle without firing and arrow.
It is sad but true.
We have limited our trips to Vegas to every (10) or (12) weeks.
If things do not "Change" I think I will open up a U-Haul business for the next couple of years.
Right now, as I see it, there are too many casinos to meet the demand. Offer is greater than demand for not enough tourists and locals alike. While we noticed an permanent increase of resorts, new resorts being built, the city becoming bigger and bigger, what happens now is that the city seems to become a bit smaller again. At least people-wise.
The problem I see is that these super big size casinos cost a lot of money and they are not very profitable under the current debt-situation. They may generate money, but simply not enough to cover the expenses. Perhaps it's a good plan to close parts of the hotel and casino floor during the next months. Perhaps this has already been done by some hotels and the people just don't notice. This might save some payroll, but it doesn't increase revenue, either.
By simply closing down casinos this would not pay off the debts the companies have. And who wants to buy a casino under the current stormy weather conditions? Even if I could, I probably wouldn't.
On the other hand, it's nice visiting Las Vegas once in a while and not being overrun by other tourists on the Strip, and not standing in line for 30 minutes just to get to the buffet. And sitting on a halfway empty Swimming pool also isn't that bad. The problem I see is that the number of casinos might get reduced to stabilize the market again. The strong operators will survive, and the weak ones must se how they can make ends meet.
Las Vegas has lost it. I went to visit last year after a 15 year hiatus, I wasn't impressed.
High table limits at empty tables. The same ripoff machines, don't deal in coins anymore. They spit out a receipt, like I just bought something. Everything costs too much. Overall, the employees didn't seem too happy.
We walked around like everyone else, clutching our wallets.
And now you have the likes of Wynn, whose idea is, I'll build a duplicate hotel/casino right next door, brilliant.
we use to come to vegas 4x's a yr. but when the strip got so build up we quit coming. it was fun coming to gamble and cheap food to help your losses, in 2004 we quit coming everything was so darn high. one of the strip's casino managers told us vegas wanted to lean toward the high rollers and hollywood set. they didn't want the average joe. so we said good bye to vegas never came back. now we keep our money in our state . vegas could boom again if it went back to the old ways . this person also told us wall street investers were taking over and they only see the money nothing else. vegas use to care about the people coming there but not now . just to creedy now
thank you
"just to creedy now"
"To"? "Creedy"? I'm not sure where to start with this statement. It is soooo rich with material.
There are so many cheap deals in Vegas it isn't even funny. And unlike Indian casinos, you might actually win something once in a while!
Perhaps you've been a to creedy, cranny?
first of all casinos in vegas were owned by a few people now wall street investers are the owners except for a few who still own casinos. any invester is out to make money otherwrise they wouldn't invest . i was talking about how much fun it used to be to come to vegas and just have fun. no i'm not a greedy granny . duhhh granny is not spell with a c try trying to spell it with a g
That million dollar bonus wasn't needed, right?
2 words, legal hooking. "They" would flock in!!
Vegas ist still an attractive place to go gambling. I travel from overseas to Vegas at least 1-2x a year. Each time I bring approx 5 grand to play and spend, and I must admit that nowhere else in this world you get more value for your money than in the Vegas' casino world. The problems Vegas is facing have been mentioned several times. Now we see a lot of big casinos with debt overload and not enough revenue coming in. And a lot of Vegas citizen out of job, some have even lost their homes. I wonder how much this will impact the crime and security rate. If the casinos have to save payroll, they will probably also start cutting on the security guards checking the parking lots. I take it there's an increase in valet service users than before, just for that simple reason. I noticed furthermore that some casinos lowered the room rates but at the same time jacked-up the so-called "RESORT-FEE". Some hotels add up to 13 dollars each night on the room, and some other hotels even more. So, even if it says...39 Dollars/Night per room, you will end up paying 55-60 dollars/night. And this, my friends, is a little difference!!! Tipping and gambling will go down under such conditions, which is only obvious. As for me, I will play shorter sessions in the poker room, but higher limits. Once a 1-2 n-l player, I will from now on sit at the 2-5 tables. win-or-lose, and if it doesn't work out, I'll go and see a movie. It's cheaper than the 10 per cent ripp-off 1-2 no limit where you play against 8 or 9 tight "PROFESSIONALS". And when my daily money is gone, I'll be gone, too.
Free wi-fi, looser slots, cheaper meals that will bring them back. That was what built Vegas. Pencil pushers and other so-called "experts" have made it unfun and unaffordable to come more than once ever year or two. We normally come 2 to 3 times a year but we are down to once ever year and a half. We set our limit to $2000 per year to loose gambling and $5000 for vacations but because we loose the gambling budget so quickly, Vegas doesn't get the mutiple rooms, meals and other money we normally spend that isn't in the "gambling budget". We use it other vacation places without the "one arm bandits".
Vegas has out priced theirselves. As George Maloof would say "Let'em play."
I completely agree with the majority of posters here in that what was once an affordable and pleasant excursion to Vegas has now morphed these past few years into a scenario of unpleasant diminishing returns for the entertainment dollar in that all these corporate properties have become greed-fuelled entities whom have forgotten the days wherein they actually offered the middle class folks value for their vacation dollar.As portrayed in the old Testament in the Bible,Christ arose in the temples of the "moneychangers"..,overturned their decadent tables and "cast-them-out"...Perhaps there is a lesson to be learned here in that these once exalted industries in this state are obviouslly on the short path to financial and moral insolvency..??..One would do well to remember that it is these very industry "titans"..that placed the crown of the land upon our current inept governor,cesearus gibbonias maximus.History books tell us that emperor Nero ..."fiddled"..whilst Rome burned..to the ground.If the casual reader has any questions;all you must do is exchange the words ..Nero:for Gibbons,..and :Rome,:for Vegas.
I live in Phoenix and would much rather go to Las Vegas than the tribal casinos here, their slots have gotten very tight in thia recession - and they are still fairly crowded. I do agree that Las Vegas needs to increase the value to the out-of-town guests such as myself (a former LV resident albeit for a short time) who are NOT high rollers and who are looking for a "locals" experience..."Free wi-fi, looser slots, cheaper meals"...I agree, and I come with a LOT less than $2000 to gamble with per year, more like $200-300 per three-day trip that I can safely lose and still pay my rent, and that's a BIG chunk of my change. I would imagine that's the case for a lot of the casual "fun run" slot players who are staying in California or Arizona and giving their money to the tribal casinos.
Laughlin needs to understand that it's only playing a secondary roll in this game for the money. Therefore, they have to understand that the hotel rates need to be lowered again. And this also applies to weekend days!!! Laughlin can only attract gamblers if it's attractive to them!!! Room rates of 59 dollars and up on old style rooms (noisy and not remodeled) is just too much, even on the weekends. If they don't change this policy, they will be faced with the "vacancy sign" for the next 10 years, even on Saturdays....
Attention readers: Station Casinos has upped its "resort amenity fee" to a level that's no longer sustainable!!! 9.95 usd plus tax per day for a USA Today plus fee local phone calls? How ridiculous? Those are hidden extra charges a stupid tourist is supposed to pay , whether he wants or not. I think this policy is unfair and is just like a slotmachine without payout possibility. Some operators have turned from "energy tax" into this "resort amenty fee" or "resort fee (Boyd Gaming)" without giving a real counter-value back to the customer. Strip casinos still don't have this policy, locals' casinos do. It's a shame. The people who don't read the rules and terms by booking online are the losers in this game. I think Station Casinos need to reduce that resort fee in order to attract customers. Otherwise they will not get them. I will book elsewhere. Red Rock has a resort fee of 12.95 for things you don't need, and if you click deeper into the "rules and terms", it even says...."24.95 plus tax" per day!!!! So, what's the point? Who likes to pay 25 Dollars for a USA today and the option to visit the exercise room? I think that's not far from steeling!!!!
And 'investOr' is spelled with an "O" not an "E"