Wednesday, Aug. 10, 2011 | 2 a.m.
When Anthony Curtis speaks of the challenge of getting debt-laden consumers to spend money in Las Vegas, his analysis is framed by personal business experience as an analyst of gaming and entertainment industry trends.
He has spent much of the past four years ridding his Huntington Press, which publishes an insiders’ newsletter — Las Vegas Advisor — on deals and insights, of all corporate debt.
He laid off half of his staff, cut expenses and worked to minimize the effect of a 35 percent drop in gross revenue when compared with 2007 levels. So as he looks at the spending patterns of Las Vegas tourists, he grasps the broader wisdom of their behavior.
“The strategy for everybody is to get out of debt. Correspondingly that means you’re not spending if you’re a business owner, not spending if you’re a consumer,” Curtis said. “The world has gotten smarter ... People are saying, ‘Let’s get this debt down.’ ”
Southern Nevada has recorded 15 consecutive months of increased visitation, according to the Las Vegas Convention and Visitors Authority, and although the trend is positive for a troubled economy, visitor spending remains below 2007 levels, when Las Vegas hosted a record 40 million visitors.
Personal savings as a percentage of disposable income increased nationally to 5.4 percent in June, compared with negative 1 percent in 2006, a 73-year low. Although consumers are aggressively paying down debt — a positive for the long-term health of the U.S. economy — it hardly benefits Las Vegas, which is heavily dependent upon the free-spending, impulsive behavior of tourists. Many have been further sobered by this week’s volatility of world financial markets, prompted in part by the congressional battle over the U.S. debt ceiling.
One result: Megaresort operators, restaurateurs and bar owners have increasingly embraced “the deal,” a classic Las Vegas strategy to entice customers and one that was largely lost amid the high-energy years of the economic boom.
“You have to do that here on many levels because they expect it,” Curtis said of the dance between casinos and their customers. “If you’re going to gamble and give your money away, you expect something in return. They’re trying at all levels to bring people in, but they’re having a hard time because people are holding their money closer.”
So we offer our tourists a deal.
The Las Vegas Advisor points to the regular mix of cheap steaks and discounted shrimp cocktails at third-tier gaming properties, but the Forum Shops at Caesars, Cosmopolitan and Station Casinos are also offering deals on a mix of food, drinks and shows, a combination of price and setting not witnessed during the height of the market.
In fact, a decade ago, top Strip executives were boasting of the wealth-driven appeal of aging Baby Boomers, empty nesters who had money and a willingness to spend on travel, food, shows and gambling. So executives throughout the valley spent billions on massive resorts, then sought to recover their investments by charging similarly high prices.
The sharpest megaresort operators have globalized their holdings, with Sheldon Adelson and Steve Wynn opening their Las Vegas-sized properties in Macau and Singapore. They recognized the purchasing power and pent-up demand of Asian consumers, and generate as much as 80 percent of their revenue from those holdings. Meantime, Curtis watches as slot play and airline travel remain below 2007 levels, while daily vehicle traffic is up along the highways leading to Southern Nevada, a sign that budget-conscious, regional travelers, many of whom are younger, seek to tap into those deals.
“The older crowd has about given up on Vegas. The market erased some of their home value,” Curtis said. A significant number of his newsletter’s older readers have canceled subscriptions, saying they would rather visit tribal casinos closer to home, where they can get their fix without paying for $4-a-gallon gasoline, hotel rooms and multiple restaurant meals. “That’s just the normal changing of the guard. People get older and your old customer base goes away.”
Then again, the longtime trends analyst notes, megaresort operators and the Las Vegas Convention and Visitors Authority may have failed to hold their base with too many marketing messages that focused on this region’s allure to younger visitors.
“They need to court their Boomers more,” he said.