Las Vegas Sun

March 28, 2024

Summer tourism is set to sizzle

Airlines, resorts taking advantage of demand for Las Vegas vacations

Increased demand for Las Vegas vacations has bumped up hotel room prices and airfares for summer travel.

While the higher price tag for a summer stay isn’t the kind of news travelers like to hear, Las Vegas is still well positioned to take advantage of the demand because it’s viewed as a value proposition when compared with other summer destinations.

While the city’s resorts will have higher room rates as a result of demand, airlines serving the Las Vegas market have created their own higher demand by decreasing capacity.

Online travel giant Travelocity.com reported that the average U.S. hotel room would go for $144 a night — $1 less than the average daily room rate nationwide in 2009 and $23 below the summer 2008 rate.

The price for a hotel room this summer in Las Vegas is considerably less at $100 a night. That compares with $93 a night in the summer of 2009 and $141 a year before that.

While Las Vegas resorts offer deals aplenty for the summer, the cost of getting here by plane has soared since the 2009 summer travel season.

Travelocity reported that the cost of a round-trip domestic airline ticket would average $360 this summer, up from $330 in 2009 and on par with the $362 average reported in summer 2008.

But flights to and from Las Vegas are a bargain compared with fares between other cities. This year’s round-trip ticket will average $333. That compares with $309 in the summer of 2008 and $296 in 2009.

“We’re seeing people getting back to their normal travel habits, looking for places where they can find really great deals,” said Jennifer Gaines, contributing editor for Travelocity. “I think last year, people were still a little gun-shy about making travel decisions when the economy was at its low point.”

Gaines said Las Vegas is consistently one of the top tourism destinations in the country, but this summer Travelocity said it has fallen behind Orlando. It’s not an unusual development, Gaines said, because Orlando has a strong summer following because of its numerous theme parks and family destinations.

But Las Vegas continues to be strong because of public curiosity about MGM Mirage’s new CityCenter development and pent-up demand.

Airlines have more control over pricing because of their ability to manage volume — something hotels can’t do as easily.

Airlines have been in a capacity-reduction mode to make each seat on their planes more valuable. Capacity can be reduced by eliminating flights or by flying routes with smaller aircraft.

For example, in the Las Vegas market, the 28 carriers offering scheduled air service to and from McCarran International Airport have 6.5 percent fewer seats — about 66,263 a day — coming into the market this month than they had in April 2009. While there have been some instances of resorts taking some of their capacity off line, it’s rare in an environment where every room represents a revenue opportunity.

Average daily room rates are rebounding from 2009 levels that were below $100 a night every month except January that year. While low room rates are great news for consumers, lower room rates are bad for resort operators that have had to rely more on rooms, entertainment, retail, dining and other amenities and not just casino revenue.

Some of Las Vegas’ biggest destination competitors this summer, in addition to Orlando whose average room costs are 12 percent below last year’s rates, are Maui (21 percent lower), Cancun, Mexico (down 10 percent) and New York City (down 6 percent).

Rossi Ralenkotter, president and CEO of the Las Vegas Convention and Visitors Authority, said Las Vegas has the advantage of having a wide variety of attractions that appeal to different markets as well as varied hotel price points for different demographics. But in the end, it’s all about value.

“I tell people this is the greatest time ever to visit Las Vegas because of that value proposition,” Ralenkotter said. “It’s not only the (hotel) rates, but it’s spa packages, it’s golf packages, it’s entertainment and dining, and the retail industry is being very aggressive in how they’re marketing. And we’ve always had a price point and a product for everyone, especially when you have nearly 150,000 rooms.”

Ralenkotter said supply and demand will continue to drive room rates, but resort companies will continue efforts to push rates higher to fulfill their obligations to shareholders.

He added that he’s happy that occupancy rates are only off slightly — 2.5 percentage points for the first two months of 2010 — but still well ahead of other destinations, given the 5.8 percent increase in room inventory.

“The occupancy levels are showing positive signs,” Ralenkotter said. “You have to consider that the length of the recession is something we’ve never seen before, so we’ve had to change our advertising and marketing message to encourage people to travel. So we’ve taken advantage of the special events we have in town and holidays to stimulate people to travel.”

Year-over-year airfare is down to some destinations with flights to Eastern Europe 5 percent less than they were in 2009, Maui (down 5 percent), the Dominican Republic (down 4 percent) and the U.S. Virgin Islands (down 2 percent).

Las Vegas is well-known as a destination that enjoys lower-than-average airfares, which makes travel a plus for local residents.

Gaines said that this summer the average fare outbound from Las Vegas is significantly lower than the national average with round-trip fares averaging $398 on domestic and international flights compared with the national average of $471 round trip.

She said a bargain trip for locals this summer is Mexico because airfares are low and resorts there are rebounding from a flurry of bad news that discouraged travel there last year.

“Mexico is a fantastic deal this year because the economy is rebounding from some negative publicity on the H1N1 virus, border violence and hurricanes,” Gaines said.

“That’s probably the best deal for Las Vegans, but there are also good deals in the Caribbean and even New York City,” she said.

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