In Sin City, Greed Is Not the Main Attraction
Welcome to Sin City, where greed and lust blatantly compete to clean out your wallet.
This President’s Day weekend, Las Vegas was the most popular place in the country to be — according to the online travel company Orbitz — and lust won by a landslide.
“We haven’t gambled at all. We’ve spent most of our money on food. Not drinks, though. We get to drink for free,” exclaimed Alanna Webber, over blasts of pop music at the Bellagio’s latest nightclub, Hyde.
Free drinks for single ladies is the standard in this town. But that’s just the bait. Gaming companies are profiting in other ways.
These four non-gambling friends are paying $350 per night to stay in the Cosmopolitan, who’s slogan is “Just the Right Amount of Wrong.”
And the cocktails they’re drinking cost men, single or not, $15.00 each.
“The Cosmo is a younger crowd. We’re here to party,” said Jenna Houssian, a 21-year-old college student.
And so is everyone else in this sweaty, gyrating room. They’re just willing to spend a bit more to do it.
"Average daily hotel rates on The Strip are up 10 percent from 2011," said Reid Webster, regional director of Gaming for Orbitz . He said the industry also is paying a lot of attention to what they call "non-gaming spend."
"It's more about the experience now. If you ever look at the commercials, it's never about gambling; it's about the spas, the nightlife, and the Michelin-award restaurants," said Webster.
Indeed, MGM Resorts, which dominates The Strip with nine casinos, recently added the shopping mecca “City Center” to its roster to capitalize on this spending trend.
“It's interesting to look at what has happened in the last three years," said Scott Voeller, vice president of Marketing for MGM. "Gaming as a percentage of total revenues is down. Seventy percent is non-gaming now.”
Restaurants and shows are MGM's most lucrative attractions, he said.
This even applies to locals.
“We’re not here to gamble at all,” said Heather Reinarz, a Las Vegas native and Hyde nightclub patron. “Most people are here to meet girls. We’re just here to have a good time, and go to restaurants.”
Gaming companies, having been badly burned in the recession, are figuring out how to capture this spending shift, and lighten their dependency on gambling.
Rachael Rothman, gaming analyst for Susquehanna Financial, says the comeback is already underway.
"Convention contract rates were also 8 to 10 percent higher in 2010 than in 2009, providing a natural tailwind to a recovery in 2012," she said. "This stronger book of business gives managers the confidence to set higher rates on independent business and leisure travelers."
Susquehanna named MGM its top pick for 2012, after upgrading WYNN resorts in early January.
Tomorrow, MGM reports its earnings and analysts are forecasting another loss. Despite this, MGM's Voeller said the companies’ 22 consecutive months of revenue increases prove that MGM is “on the upswing.”
Year to date, most gaming stocks are crushing the market. MGM Resorts is up 40 percent; Boyd Gaming is up 27 percent; Las Vegas Sands is up 24 percent, and Wynn Resorts is up only 2 percent.
Notably, Wynn resorts is in a legal dispute with a major shareholder and board member over its business outside Las Vegas.
But on The Strip, the message is clear: it's not all about gambling anymore.
“I came here to see Elton John, but he cancelled on us. So, we went to STK restaurant [at the Cosmopolitan], which was the most expensive thing we’ve done,” said Ilvin Nievs, a guest at the Venetian.
Take it from the billboards, who all seem to say: Stay at the table too long, and you might miss the party.