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twitterGaming stocks tumble on earnings, economic news
Justin M. Bowen / File photo
A view of the Las Vegas Strip.
Published Tuesday, Oct. 27, 2009 | 2:34 p.m.
Updated Tuesday, Oct. 27, 2009 | 3:52 p.m.
Gaming stocks fell broadly Tuesday after three big Las Vegas hotel-casino operators reported third-quarter results reflecting the continuing economic downturn.
And with consumer confidence nationwide falling in October, more pain may be in store for Las Vegas. U.S. consumer confidence is seen as a key factor influencing decisions to travel to Las Vegas and other destinations.
Harrah's Entertainment Inc., which doesn't have publicly held stock, said Tuesday that its revenue fell 13.7 percent to $2.282 billion and even more in Las Vegas, by 17.5 percent, as the stubborn recession continued to curtail activity at its casinos and hotels.
Wynn Resorts Ltd. said revenue grew slightly to $773 million, but its quarterly profit was off by a third to $34.2 million or 28 cents per share. Wynn reported hotel room occupancy of 83.9 percent during the quarter was down from 96.1 percent during the same period of 2008. Average daily room rates fell from $272 to $210.
Boyd Gaming Corp. said its revenue fell 28.3 percent to $398.2 million and its quarterly profit of $6.3 million or 7 cents per share missed analyst expectations -- reported by Thomson Reuters -- of 10 cents.
Even as it beat earnings expectations of 16 cents per share, Wynn stock fell 11 percent to $56.13.
Boyd was off 17.8 percent to $8.78.
MGM Mirage and Las Vegas Sands Corp., like Wynn and Harrah's big operators on the Las Vegas Strip, have yet to report third quarter results. But their stock fell too, with MGM Mirage declining 12.45 percent to $9.63 and Las Vegas Sands off 10.9 percent to $14.31.
Also Tuesday, the Conference Board said its U.S. consumer confidence index unexpectedly fell to 47.7 in October. It also fell in September to 53.4 vs. its base year reading of 100 in 1985.
The New York-based board's Consumer Confidence Survey is based on a sample of 5,000 U.S. households.
"Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment,'' said Lynn Franco, director of the Conference Board Consumer Research Center. "The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."
Commenting on the importance of this and similar national economic reports, Las Vegas economic forecaster John Restrepo of Restrepo Consulting Group wrote in his latest Economic INsight report: "The health of the national economy IS the primary driver of the health of the Southern Nevada economy. As essentially export-based -- we export experience and entertainment -- our economy is very tied to the health of consumer confidence and discretionary spending, not only in the U.S., but globally as well."
In an interview, Restrepo agreed with the Conference Board that Tuesday's numbers show consumers worried about jobs and housing prices will remain reluctant to spend money.
"An area such as ours based on discretionary spending is going to continue struggling," he said. "If we had a more diverse economy, this wouldn't be such a big issue."
Restrepo said he recently toured MGM Mirage's CityCenter megaresort complex opening in December.
"It's a fabulous project. We're all hoping it will be a catalyst to a return to spending we don't have now," he said.
It's unknown if the boost to Las Vegas visitation CityCenter is predicted to bring will be sustainable and whether it will cannibalize existing business, Restrepo said.
"We're in such uncharted territory with this kind of recession," he said.
Discussion: 46 comments so far…
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This should be the catalyst for the big three to take the necessary action to offer a return to the value oriented course of action which attracts tourists to Las Vegas. Give the rooms and meals away and loosen up the slots NOW! while there is still a chance to salvage anything that resembles the former Las Vegas Vacation experience! DO IT NOW!!
Yep, the gaming sector received a 11-12% haircut today.
On another note; Boyd won't be resuming that Echelon project for at least another 3-5 years (if ever).
Just check out that eye-sore they've created -- sure has tourist appeal huh?
: )
Yeah Harley, Boyd sure goofed by tearing down the Stardust. They were warned by EVERYONE that it was a mistake, not to mention the tens of thousands of decades long loyal gambling customers whe begged them to keep it going!
environprotector is correct. It is truly mind-boggling that none of these "geniuses" has considered offering the sucker (errr, visitor) less of a hosing. Get rid of the 6 to 5 "blackjack" and other garbage games, bring back at least halfway decent value for the visitors, and at least pretend to want customers. Maybe a few will trickle back. Continue the lousy service, rudeness, arrogance and hostility and continue the slide towards bankruptcy.
Las Vegas is an overgrown carney sideshow.
The Gaming/Hotel Industry is really the epitome of what service business and customer treatment. Here you have people coming to your property willing to throw away tidy sums of money at your machines and tables. All we want in return is a hug and a kiss. The great Benny Binion was the author of this concept, and it's what made the Horseshoe such a huge success across many years. Ted fully understood this concept and continued the practice with huge profits, and a real good time for us customers as well. It's what drives the business. The current casino owners have completely lost sight of this basic idea. The thing that is so frustrating is to watch the industry imploding here in Vegas, and the owners will opt to go bankrupt, put thousands out of work and turn this place back into a dusty desert again...
Getting much harder to steal from the customers.
drove the strip last week, what a disgrace to what the strip used to be, blame your local politicans to ruin a wonder of the world. remember steven king's book, the stand, where all the evil people live in vegas, evil people have overbuilt, and don't give a rats butt for you, just the money, it's always about their money, wake up they don't care about your issues-guns, abortion, illegals, gays. just goes to show some people CAN be fooled all the time
Too greedy,too long too bad,
May they all starve in peace..
They all deserve to go broke.
Keep raising prices/hold %ages and gouging your clients and this is what you get.
Build some more, dummies....LOL
Despite the 3Q losses the 4Q is looking better, even if it does, we'll never see any of it, We haven't even seen any stimulus money. Where is it Jim Gibbons, Harry Reid, Dina Titus, Oscar Goodman ? I don't see any of them getting re-elected. I am sure when election time comes around, the money will start to flow in, by then it will be too late !! alot of people who are doing what they should be doing, working paying taxes are still in a bind, the promises have been broken and the ship is sinking fast !!!!! Why don't we have any leaders in Government in this state ?????
Just wait until City Center is done & the 10,000 construction workers lose their jobs.
It's not like any of these other projects are doing anything besides collecting dust.
This town is SCREWED
oh my god, does anyone REALLY think that citycenter is REALLY going bring any kind of real "boost" to our economy?
give me a break. people all over america are trying to keep gas in their car to go to job interviews and you think they're going to hop on a plane and come here for that ugly mess?
i really do think that there's about to be an atomic bomb of vacant homes and closed businesses once city center finishes up.
i just think people have gotten smarter now. it's not even FUN to lose your money now because if you put $20 in a nickel slot machine just to hear the "soundtrack" to it ( star wars, austin powers, etc. ) you're freaking money is gone and you never get to hear or see any of the visuals.
so...why bother coming here? for the bebe stores?
Right on, Stevem. City Center is ugly and people don't have any money to come to LV and see that monumental piece of junk. I just saw this story that perfectly describes what it is like for many people now. It's about a young student loan debtor who doesn't have money for anything. She can't eat out or go to movies or party with her friends, and sometimes she even has to skip a meal. I don't think anybody in her position is going hop on a plane to see City Center.
http://online.wsj.com/article/SB12551186...
City Cemetery is the last gasp and carcass of the old world of the criminal pre real estate bubble burst economy which has put us in this miserable state we are in today. Who in their right mind is going to show up there to celebrate that? Don't even bother opening this extinction...
From a visitors perspective, my wife and I travel to Vegas twice a year, at least. We have been making the trips since 1990. It's amazing that I look at 1990 as "the good old days". We stayed at Mirage on our first trip and were in total awe. As time went on we realized we needed to search for value if we were going to be able to continue coming to Vegas. We started staying at places such as the Stardust, westward hoe, etc. Well...a couple of years ago we started staying downtown. It's about the only option left for any chance at value. Yes, you might find a good price on rooms on the strip at "some" of the hotels, but they just raised the prices on drinks, food and entertainment by 30% to make up for it. So, we have been reduced to staying at the four queens (Not a bad hotel)on comps and go to Mermaids when we feel like drinking and Goldengate when we are hungry. If we lose anymore value we will no doubt have to find a different form of entertainment and put Vegas in our rear view mirrior for a while.
A note to locals: We wish the best for all of you. We have enjoyed your hospitality for many years and hope it all turns around again. As you know, Vegas/Nevada has survived many storms...I know the great people of Nevada will survive this one!
ATVDAD1 : You are so the people we are trying to get the casino executives to understand whom are the best and most important folks to take care of out here. Let me be the first to apologize for these idiots who are destroying our town and industry. We hope that one of these days they will understand, but they are thick headed and greedy, two things which one needs a jack hammer to get through to. Please come and visit us, and perhaps a stay at the Orleans might be more down your alley. Thanks again for the kind words here!
no one looks forward to the experience at the airport so vegas has that going against them. sitting in a casino can be done w/o flying to vegas now that gambling is permitted everywhere. i dont see any near term recovery for the gaming industry especially because of the foreclosures currently in vegas and reno.
ATVDAD1, my wife and I are very similar to the two of you. Unfortunately, I believe that due to the massive amount of debt that most of the casino companys are carrying that they really are desperate for every dollar they can get. They just can't make themselves see that they really would be better off if they would follow many of the suggestions of the people on this board. I personally feel that it will take many years and much suffering before they realize that they really have no choice if they want to survive. I truly feel sorry for all of the employees that just want to provide great service and earn a good living. They are definetely not to blame. We really hope to return someday, but just like most people it is just not worth the trip right now.
Another metaphor--City Center, the self-driven fatal stake in the heart of the Great Vampire, MGMM. The selfishly driven mistake in the heart of what was Las Vegas!
Corporate greed and mediocrity have certainly taken their toll on LV. An old college roomate of mine comes to LV every year for the NAB convention. He lives and works in NYC and enjoys the finer things in life; good food, lodgings, entertainment and so on. He's told me that over the past few years LV has become a "total rip-off" (his words) charging huge prices for no visible value. This from someone who lives in Manhattan!!
Empty corporate suits take note, you've destroyed this town and we will all live with the consequences for years to come.
Right on Stevem---
Speaking of atomic bomb blasts, City Center would have been a fitting test target out there in the old testing range to check the endurance of overbuilt steel and glass archtecture. Too bad it cost so friggin much.
I agree with a lot of these posts.. I am only 23 and have been to Vegas 6 times in since turning 21. When i first went 3 years ago( almost 24 now) it was amazing. the bright lights for the first time the excitement the booze girls etc... i actually remember getting decent room rates and good deals while there.. i went over the summer and it was totally different from the first time.. 4o dollar cover to bars??? u got to be kidding me.. they gave me three free nights but food was ridiculous.. i prob spent more on food than gambling and booze. How can a place in 3 years become so different?? i am coming back in Jan bc of my buddies 21 b day.. i am excited and not at the same time.. i used to try to find any chance i could to go to Vegas now its just a money pit.. side note city center looks terrible.. this summer i couldn't believe that was actually going to be something people are supposed to be excited about.. wow.. all the best.
just stayed at orleans, well run clean place. wish sports and race book was bigger.
On the City Center project, does anybody know who will be the ATM / Cash Advance vendor?
Is it GCA, Global Payments, or NRT?
Does any of the Casino Execs. have a clue what they are doing? As I read some of these comments it sounds as though there are people who collectivly agree on one thing.The Casino Industry needs to change its philosophy back to what built this town.
Unfortunatly MGMM,Harrahs,are so tunnel visioned that they will loose their hind ends than admit their new operation policices are not working.
They gambled on the reputation of Vegas to continue no matter how they changed their operations.
I am amazed that there is still people returning to Vegas after there previous experiences over the last couple of years.I recently moved here to Vegas "Great Town" yes but not what I expected.I had never been to Las vegas before and could only rely on what I had heard over the years.Yes from what I heard to what I have encountered is a real disappointment.
It appears to me that Vegas has completly lost its value.City Center is to over powering and will appear to be another money pit of expensive rooms,stores,resturants,and tight slot machines along with uninviting table games.
My wife lived here for 10 years from 96 to 07 during the boom and remembered the days of being able to take her kids to the strip
and enjoy many of its venues.She now says there is no way that she would do that now.Knowing my wife,when she and her children went to the strip she spared no expense and had fun,eating riding rides and so fourth.Now you cant buy a decent meal without spending a small fortune.Not to say you walk by the Imperial Palace and see seductivly dressed girls dancing on the bars facing the street.What ashame and what a loss to the strip.
Maybe one day the Execs. will realize that they need to do to bring back the excitment that was created before they were in their positions of stature
If professional sports leagues i.e. MLB, NFL would commit to Las Vegas and there's enough land to accommodate a world-class sports arena, wouldn't the Echelon area be an ideal location, particularly for a community with a plethora of hotels seeking business/economic diversification?
: )
Gaming sector getting whacked again today down another 7-8%.
: (
As expected. Also expected the usual comments from folks who want Vegas to go back in time. Not going to happen.
It's a national/worldwide economical correction. You can treat customers like gods and give them everything for free and it still won't cause a tourist boom. The money simply isn't there.
Yes, things have gotten very expensive, but that has happened everywhere. Not just in Vegas. And once prices go up, they are not going to come down, unless executives everywhere realize they are in part the cause of the problem but most importantly also have a good portion of the solution in their hands. Unlikely though, they'd rather sink the ship than earn a penny less.
What I suggest is that Vegas exploit the money that is there: European and Latin American tourists. Increase marketing over there like crazy.
Bringing Garth Brooks is a brilliant idea. That's a good way to increase visits by middle America.
I'm looking forward to seeing CityCenter completed. But I imagine they'll have to offer some decidedly downscale prices. There's just too many upscale high price rooms/restaurants. Vegas, like everyone else, took a gamble that unreal economic booms would continue forever- and lost.
The public is outraged by the level of service offered by employees of the casinos. Well, let's do examine why that is happening. Employees wages have stagnated over the last 20 years. Benefits have dwindled and employees are paying more for heath insurance. More companies have dropped 401K contibutions. Management threatens employees to do more or face exit from the companies payroll. Now, let's again examine as to why service levels have dropped in Las Vegas.
right on keno.
Critias : You seem to be overlooking one thing. The one thing that created Vegas, the one thing that made it different than any other place in the world. The one thing that was responsible for it's growth over the years. That one thing is called dreams. The founding fathers be them businessmen and/or gangsters knew that they had to make this place special to ordinary everyday people if they were going to succeed. They passed that test then and the test of time. You can't call a marketing strategy which models itself on that formula going back into time. It's a formula that was a success because it sold everyday regular folks a dream, and offered anything they wanted. You can't tell me that's not persuasive enough to get tourism jump stated here in the valley again, no matter what the current financial situation is around the country and world for that matter. Folks are out there with some disposable income to use on a vacation which offers value now more than ever. As soon as the idiots who are running the casinos wake up out of their state of denial to this, they hold the key to solving the problem or surrendering to it.
I'm in the mood for a for a $100 meal followed by some high end shopping instead of gambling (Ha Ha). Idiots to say the least. Maybe the bean counters can soak the beans and make a meal for themselves.
hey environprotector
You hit the nail on the head. Las Vegas became a success because it made the middle class person feel like a big shot. This feeling of a being a big shot by making food and rooms super affordable is what made the gambling explode. Now when the average person goes to Las Vegas they are reminded that their poor by having to stay in dive hotels and eating nasty food that they can afford. Then these average people go for a walk down the strip and look at all the shows and resturants that they can't afford while they wonder what it must be like to be rich. This is why people have stopped coming. THERE IS NO VALUE!!!!!
a few trillion dollars in investments along the strip and visitors are not coming...what ever happened to build it and they will come?
Hey, Boyd Gaming! Have you seen the TV show, "The New Adventures of Old Christine"? Well, why don't you think of your Stardust/Echelon property as a venture such as this? Why can't you "drop" the $2.4B Echelon and design/develop a 700M or 800M (or 900M) New Stardust? The new adventure of the Stardust would not need a shopping center or an upscale, world-renowned restaurant. Nor would it need internet service or a spa (just a plain ol' exercise room). You could even change bed clothing once every two or three days (for the same guest, of course) and offer a buffet with 20 or 30 items rather than 50 or 60 (a couple of short order cooks might be able to pull this off). Can't you just see it?!? The red and blue new Startdust? I think with a little reverse planning, you could upset the 'upscale applecart' on the Strip and re-introduce us out-of-town Vegas lovers (and devoted locals) to the new excitement, fun and value of the Old Stardust. Wow! What a concept!
i hope all those savvy vegas folks were putting
their retirement into the stock market 401 k
like bush wanted.
bush really raped this country.
bush, texas and the christians.
what a laugh !
7pesos-get a clue. barney frank and pelosi raped this country will their liberal housing policy. bush saved this country from complete disaster. but don't worry obama will finish the destruction.
The worst thing to happen to LV was the extreme move upscale with expensive rooms, "world class" chefs, trendy clubs with high cover and higher drink prices. Once Steve Wynn had success with the Mirage (and later TI which lost it's uniqueness during MGM ownership), it became "out with the old" (Sands, Stardust, Frontier, etc). and in with the new, pricy look alikes (Venetian, Bellagio, Palazzo, Echelon, Mandalay Bay, etc, etc.) And we all see how well the Echelon has panned out. Some pricy places of the '90's (Luxor, MGM, etc.) are now closer to being "value" properties. The developers need to realize that the overbuilding at the high end is the problem. If I ever had the bucks to pay a couple hundred or more for a room, I'd opt for the classy Wynn or Encore or maybe an old classic like Golden Nugget. Not one of the aforementioned generic properties. Even the king of value, Bob Stupak, lost his lucrative niche when he took the old Vegas World to the more upmarket Stratosphere. All that being said, I still LOVE Las Vegas!
vegasfun, see your still in a coma, guess what, those big rax breaks for the rich haven't worked out so well have they. get in line for your $7 an hour job at city ctr.
An employee of mine and his family took their first trip to Vegas this past summer. I have been to Vegas many times and was more than happy to give him some advise on his trip. He left for his trip with excitement and anticipation. Upon his return his response to me was "well all that I can say is been there and done that". He is the third person that has said that to me this year. As long as people have that attitude about a trip to Vegas things will not change.
It's time to ditch the cheap hollywood glitter queens, rap stars, tattoo artists and goofy looking high wire acts headlining so many of the big box casinos populating the strip nowadays and get some real entertainment in here.
The kind of entertainers that are capable of drawing crowds with disposable incomes instead of the usual penniless trouble makers that follow the hollywood crowd around.
As I like to say on various posts here, " Are you listening Casino execs? " " Are you listening? "
Planetearthcalling--
My wife and I were comp'ed a night at the original Wynn a couple years ago. It was a gorgeous suite on the 57 floor with a view over the golf-course.Our room we so high, we saw an airplane pass below. Their were chiffon bathrobes for us to lounge in and and complimentary slippers in the closet, flowers on the coctail table, several flat screens, including one in the bathroom, and remote controlled window drapes (from bedside).
The bummer was this swanky cabinet filled with tempting snacks, chilled wines and beers, water, juices, etc.
Each item was catalogued in a fancy brochure. A bag of pretzels,for example would be $5.00; a package of nuts, $8.00; candy bars, $7.50; small bottle of wine (I think it was $30 bucks), etc. The kicker is that each item is sitting on an electronic sensor. You lift up any of these treats--the sensor knows! You have 30 seconds to replace the item on the sensor or the price of the missing item automatically goes on your bill. There's a sweet little note that makes this very clear.
Totally awesome. We tiptoed away from the cabinet, carefully. What a charming offer. We hoped our $20 tip would not be embarrasingly small for the housekeeper. That was all we had left after leavng $500 bucks down stairs.
Indian Casinos hurting Vegas. We get a free bus ride and free cash. We win more than Vegas.