Las Vegas Sun

March 29, 2024

Tourism:

Demand for summer getaways nudging room rates higher

Cloud Nine

Justin M. Bowen

A view of the Las Vegas Strip in October from the Strip’s south end.

Las Vegas hotel rooms are more expensive this summer, and although tourists don’t like that, it’s great news for Southern Nevada because it means demand is going back up.

Hotels typically raise rates only when they have plenty of people clamoring for rooms. The average price of a hotel room this summer in Las Vegas is $100 a night. That compares with $93 a night in summer 2009 and $141 in 2008.

Online travel giant Travelocity.com reported that this summer’s average national hotel room price is $144 a night — $1 less than the comparable rate nationwide in 2009 and $23 below the summer 2008 rate.

Las Vegas is consistently one of the top tourism destinations. It is listed this summer as No. 1 by Orbitz and No. 2 by Travelocity, behind Orlando. Orlando is consistently a strong summer performer thanks to its numerous theme parks and family destinations.

In its favor now, Las Vegas has the public’s curiosity about MGM Mirage’s CityCenter development, pent-up demand and its still relatively low prices, says Jennifer Gaines, contributing editor for Travelocity.

“We’re seeing people getting back to their normal travel habits, looking for places where they can find really great deals,” she says.

The cost of flights to and from McCarran International Airport is up but still looks reasonable compared with a nationwide average. The increase also has to do with demand, but in a different way.

Airlines have more control over pricing because of their ability to manage volume — something hotels can’t do as easily. Airlines have been making each seat more valuable by reducing the number of 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 have 6.5 percent fewer seats — about 66,263 a day — coming into the market this month than in April 2009.

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

But a round-trip to Las Vegas is averaging $333. That compares with $309 in summer 2008 and $296 in 2009.

This summer’s average outbound fare 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 — which benefits locals, too, of course.

A bargain destination for Southern Nevadans this summer is Mexico because airfares are low and resorts there are trying to recover from a flurry of bad news that discouraged travel there last year, Gaines says.

“Mexico is a fantastic deal this year because the economy is rebounding from some negative publicity on the H1N1 virus, border violence and hurricanes. That’s probably the best deal for Las Vegans, but there are also good deals in the Caribbean and even New York City.”

In Cancun, summer room rates are down 10 percent compared with the same period last year, and New York City’s average room cost is 6 percent less.

Some of Las Vegas’ other biggest destination competitors also have lower hotel room rates this summer. Average room rates in Orlando are 12 percent below last year, and 21 percent lower in Maui.

Rossi Ralenkotter, president and CEO of the Las Vegas Convention and Visitors Authority, argues that Las Vegas still has “the value advantage.”

“I tell people this is the greatest time ever to visit Las Vegas because of that value proposition. 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.”

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, Ralenkotter says.

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.

“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,” he says. “So we’ve taken advantage of the special events we have in town and holidays to stimulate people to travel.”

A version of this story appeared in the latest edition of Las Vegas Sun’s sister publication, In Business Las Vegas.

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