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July 31, 2014

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Report: As Houston reinvented itself, so can Las Vegas

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Las Vegas business and political leaders reeling from the globalization of the gaming industry and the expanding power of gaming operations in Macau and Singapore should turn to Houston for lessons to successfully rebuild a troubled regional economy, says a newly released report from a UNLV professor and graduate student.

The south Texas city reinvented itself as the global command center for the international energy industry after a dramatic decline in domestic energy production during the 1970s, said UNLV professor Bo Bernhard, executive director of the UNLV International Gaming Institute, and hotel college graduate student Mikael Ahlgren.

“Critics feared that the city was tapped out — literally and figuratively — and that it faced a future that looked similar to so many other cities that had thrived in an industrial age, but then died when post-industrial forces took over,” the authors wrote. “At this stage, however, Houston’s companies made a series of smart (and what we would now call ‘sustainable’) moves. Crucially, they began to search internationally for new business opportunities. During a time when oil averaged $30 a barrel for 15 years, Houston got more efficient, survived, and then found itself well positioned to grow once again when the market turned. How did Houston manage to change course, and during a period when it seemed that the entire town might fold ’em? Can Las Vegas follow this transformative path — indeed, is Las Vegas quietly following this very same path?”

Bernhard and Ahlgren offer a series of suggestions to transform the Southern Nevada economy. Among them, Las Vegas must enhance its appeal to talented individuals, a problem in a city that in recent years has found a number of top casino industry executives — Caesars Entertainment CEO Gary Loveman, among them — commuting from homes in other cities to work here.

“The energy industry in Houston has invested large sums of money in cultural projects, with the goal of making the city appealing to the talent the industry wishes to capture,” the report said.

The scheduled 2012 opening of the Smith Center for the Performing Arts and the 20-month-old Cleveland Clinic Lou Ruvo Center for Brain Health contribute to Southern Nevada’s livability, the authors note. They quote Zappos CEO Tony Hsieh to support other quality-of-life improvements.

“To get the kinds of people and businesses here to make it happen, you’re not going to do that with just the Strip,” said Hsieh, who is moving his corporate headquarters to downtown Las Vegas. “If that’s all Vegas offers, they won’t come here.”

Las Vegas, like Houston, must be a regular stop for international executives hoping to gain the operational experience they fail to develop at overseas gaming properties. McCarran International Airport must seek a greater number of direct flights to Asia, Central and South America to foster such relationships.

“To facilitate these kinds of cross-national, cross-pollination processes, Las Vegas should pursue honorary consuls, which are relatively easy to set up and can foster a strong social and legal support system for ex-pats,” the report said. “Once more, the model here is in Houston, where consulate offices were originally established because of the oil industry, but ultimately benefitted other sectors as well. In Las Vegas, it might be possible to encourage honorary consuls to help with visas and other domestic challenges that might emerge between countries that wish to share resources.”

The authors note that technology company Switch’s high-speed data processing facility on East Sahara Avenue provides the infrastructure for what many believe is the eventual legalization of online wagering.

“If Las Vegas’ gaming companies are able to leverage their political muscle in Washington, D.C., and then leverage the infrastructural advantage that is the mega-computer in their backyard,” reads the report, “the city just might catapult itself into a future when gambling is not only consumed on-site in billion-dollar gambling cathedrals, but also on one’s person in the form of the smartphone or laptop.”

Finally, they note, as Texas universities have become centers of research and training for the oil and energy industry, UNLV’s global role could be elevated within the expanding casino industry.

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  1. Houston's financial troubles were due to over-extending credit before the price of crude oil dropped. However what this delusional article fails to also mention is that Houston also has one of the busiest oceanic shipping ports in the world, has a large agricultural base (shrinking due to real-estate development, but still prevalent), and numerous benefactors over the years that helped build up it's economy. As such over time it has migrated from Agriculture (cotton), and eventually moved to Energy (oil). So when times are tough, it was able to adapt. Besides that, the Gaming Industry is a far cry from the Oil industry. If Chevron for instance goes overseas to explore oil, they are needed to remain there to run & maintain the equipment that extracts the Oil. And in many cases they can sign exclusive rights to extract oil & gas, as well as being split from Standard Oil of days past, the companies all work in tandem. By contrast MGM goes to Dubai and sets up a hotel, they aren't needed any more. Customer Service while key to a business' success isn't something you need a Bachelors or a PhD to implement unlike Geology or Petrochemical Refining. So as an oil company expands across the world and becomes richer, the Hospitality and Gaming industry just dilutes itself and lessens it's value.

    Houston also expanded over time to include other industries such as Tech with Compaq/HP settling in, as well as all of the Energy Industry suppliers as well that build the extraction and refining equipment. You can't even keep slot machine and hotel linen manufacturers in Las Vegas.

    As such after the economic crash of the 1980's, the industries were able to maintain job numbers, and people moved into bargain homes and re-established communities. They didn't flee Houston.

    Unless Las Vegas can lure another type of industry that demands almost ALL of that industries suppliers to remain in the area, it will NEVER be a booming metropolis.

  2. Unfortunately the dinosaurs that still rule Las Vegas can't let go of the Mega Gaming Model. At a time when we need to be conserving natural resources, we are building more mega shopping complexes that require more power and water than many small towns in America. Heaven forbid a bloated drunken tourist would have to walk more than fifty feet to buy another T-shirt. True economic diversification is what we need, not this constant reinvention of the same old failure. We have cultivated a giant "Stinking Lilly" in the middle of nowhere. No matter how much water and fertilizer you dump on it we will not see it bloom again in our lifetimes. We have way too many people living here, and no indigenous resources to support us. Water prices go up every few months it seems, along with electricity, food, entertainment and any other consumables required for the people that actually make Vegas function. Everything has to be trucked in just about, and it is priced accordingly. Water, or lack there of, is our biggest problem. I pay near $500.00 a month most of the summer just to have a lawn. I refuse to surround my 50 year old country style house in the middle of the art district with tan rocks and cactus.
    The crime rate has gone up a thousand times in my neighborhood alone. People are starving, jobless, homeless and are losing everything, including their composure. People getting openly beat up in the streets, homeless people by the thousands wandering all through our yards, stealing anything they can carry. Almost every single restaurant and small business has been run out of town and replaced with "Get Cash Now" places. What used to be a Taco Bell, Pizza Hut or a Kenny Rogers Roasters is now a front for modern day loan sharks. People taking advantage of families that have already been destroyed. The same people that dragged Las Vegas into the quicksand over the last decade are still here making the same mistakes that got us into this mess.
    The fact that other cities in the country are growing and flourishing while we stagnate is proof of our ignorance and greed. We need to completely reinvent ourselves with new efficiencies in managing resources, handling the huge tourist influx weekly and taking care of the locals that do ALL the work. I have been a very hard working person my whole life. I am married with a child and have lived in the same house for 19 years. It is now worth a fifth of what it was a couple years ago and for the first time in my life I have been on unemployment, [twice] for an extended period in the last 18 mos. My house is in foreclosure and my electric bill was around 750.00 a month this summer?!? Thank you Bank of America, NV Energy and SNWA. If it wasn't for your corporate greed I would be stuck in one of the many overcrowded shopping meccas buying my daughter overpriced Christmas presents. Instead I will likely make her an IOU XMAS 2011 card made out of an old check stub from when I had a job.

  3. Well thought out and written stories; great comments that were right on the money.

    Go to NationalDebtClock.org and pick the State. Texas itself is deep in debt, $212 billion, for a debt/GDP ratio of 18% and per capita debt of $8,240. Houston is an integral part of the problem.

    The Dinosaurs that own Las Vegas are busy chasing and harassing small businesses like Doty's out of existence in a pathetic effort to add a few corroded nickels to their bottom line. They will never change until they leave.

    Great visuals too, created by the artistic rhetoric of the "Stinking Lilly". That one is worth more than one story.

    Wasn't Stinking Lilly the name of the boat that Humphrey Bogart sailed up the Amazon? The mosquitos on that river are so big in the summer that they can be swatted and thrown on the Hibachi for lunch; sandwiches aren't necessary. Fishing poles aren't necessary either. Just catch one of the occasional spears that come flying out of the jungle at the boat and use them to stick a big, fat Piranha or two for dinner. Ahhh - the good life.

    And yes, this sounds very much like another rehash of the repeated Government study that is pulled out every five years and has the previous names changed to protect the guilty. There are no ports or agricultural centers around Las Vegas, and comparing it with Houston is not even a close match.

    The intelligence, engineering and science that built the Switch doesn't want to come here. We will get the customer service, rent-a-cop, technician and janitorial jobs and someone else will get most of the income. When the power is finally pulled at some time in the future, the Switch will become just another fur lined mothball in the sand, like the Atlas Pulsed Power Experiment in the Desert that was also supposed to bring technology to Nevada but only padded the retirement portfolios of the Bechtel management in San Francisco.

    If I remember the name of that Bogart movie, I'll watch it again for some pointers. Not much happening here anymore, and its starting to feel like a good time to book.

  4. It's all about education. My daughter is in 2nd great in a school that rates a 10 of 10 on Greatschools. She's never studied for a spelling test and has never missed a word. On her list last week was "car." Seriously? Car is a spelling word for a 2nd greater in one of the best elementary schools this city has to offer??? What a complete joke. She could spell car when she was 4.
    Then realize that 53% of kids didn't graduate on time last year. Face it, we have an unhirable populous. Our bigger problem is "structural unemployment" not "cyclical unemployment. If you're an employer you'd have to be crazy to move your company here. For too long our teachers and their union have failed Las Vegas and this economic downturn has exposed our weakness. As long as our kids are uneducated it's silly to say we must diversify. An educated populous must come before diversification can happen.
    So..... we must increase property taxes (perhaps double them - extremely painful but our only hope) - we must fire most of our teachers and administrators (hire Michelle Rhee if we could get her) - we must pay the new teachers more and import them from around the country (plenty of talent sitting on the sidelines) - if the new teachers must perform or they are gone - these teachers will move to Vegas and help absorb some of the excess housing (housing we already have plus the housing vacated by fired teachers who will no longer be able to make their payments) - then our newly educated kids can be of some use to a company making money in 2020. Next, we must turn UNLV into a real college. Fire professors and hire real talent. Build a real/beautiful campus and attract better students/professors. Provide free education to any student who attends 4 years of high school in Las Vegas, who scores in the top 25% on the SAT, and who pays income tax in Las Vegas for 5 years after graduation.
    Our problems here have no easy fix - real change is the level of education of our populous is our only way out.

  5. Name One successful Metropolitan area that is successful with a failing Public Education System.
    Our Local politician are incredible at forming commissions to kick the can down the road, when they know full well what needs to be done.