The future of Las Vegas

Gary Loveman

Sunday, Oct. 16, 2011 | 2 a.m.

You might be surprised to hear this from the CEO of a company that operates 52 casino resorts in seven countries, but restoring prosperity to Las Vegas is not dependent on building bigger, flashier casinos and more luxurious hotels.

That wasn’t always the case, but as Las Vegas tries to find its way past double-digit unemployment and record foreclosure rates, we need to make sure we’re looking at the right solutions. And we need to be both honest and imaginative.

For many years, this city — and many of its residents — prospered because of a construction boom in both casinos and housing. Casinos such as the Mirage, Bellagio, Mandalay Bay, Wynn and Venetian drew growing numbers of visitors… who spent increasing amounts of money… which created more jobs… which attracted new residents… who needed new housing and bought more things… all of which fueled the local economy even further. It was a dynamic cycle of growth, turbocharged by a prosperous national economy.

But that recipe for success will no longer work, and not just because the economy has turned sour. Even before the recession hit, the marginal benefits of building ever-more extravagant casinos and hotels were rapidly diminishing. There just wasn’t enough room for differentiation at a cost guests were prepared to support.

Instead of the next chapter in an arms race for luxury, the key to restoring growth in Las Vegas is diversification, especially when it comes to our entertainment options.

Many years ago, Las Vegas went through a misguided effort to convert itself to a “family-friendly” destination. That’s not the sort of thing I mean when I say we need to diversify. This city’s appeal to tourists and conventions will always depend on its success as an adult destination. But commercial casinos now operate in 22 states and Native American casinos in 25, and our overseas guests have a growing number of gaming options as well. We need to create new reasons for people to come here, stay here, and spend here.

Terry Lanni, the late former CEO of MGM and ex-president of Caesars World, was one of the first casino executives to recognize the value of diversification. At Caesars World, he pioneered the then-controversial idea of adding dedicated shopping areas to casinos by overseeing the building of the Forum Shops. The Forum Shops ultimately became the country’s most successful retail mall, and now nearly every casino has followed suit. Nobody questions anymore that shopping is an integral part of the Las Vegas experience.

It’s now incumbent on the rest of us to be similarly visionary. Fortunately, this city has more than its share of innovative builders and thinkers.

Recently, Caesars Entertainment announced plans for the Linq, a new entertainment area to be built between the Flamingo and Imperial Palace. The Linq will include restaurants, shopping, entertainment, and the world’s tallest observation wheel. Like The Grove in Los Angeles and Faneuil Hall in Boston, it will create a pedestrian destination completely different from anything now available in Las Vegas. In essence, the Linq will take advantage of existing assets and parlay them into new opportunities. Most importantly, it will create up to 3,000 construction jobs and 1,500 permanent jobs in a city that badly needs both.

Building a new arena on the Strip would create an even more opportunities for growth and jobs. Just east of the Linq, the arena would be easily accessible to guests of every casino on the Strip. As our only modern, world-class arena, it would help retain events like the National Finals Rodeo while also attracting professional sports franchises to the city.

According to an independent study by Applied Analysis, the arena would create nearly $8 billion in economic activity over 30 years, generate about $20 million per year in incremental tax revenues, and provide 2,100 jobs during construction and another 3,000 permanent jobs upon completion.

The arena is truly the next step in the growth and development of Las Vegas. Like the Mirage when it was first built, it will spur a significant transformation in the city’s image and appeal. And like the Forum Shops, it will add a completely new dimension to the offerings we have available — for visitors and residents alike.

I believe in the prosperous future of Las Vegas. It won’t look exactly like our prosperous past. But great cities have always found a way to connect their pasts with their futures, and that’s what we now need to do — expeditiously.

Gary Loveman is the chairman, president and chief executive officer of Caesars Entertainment.