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LOSING THEIR GLITTER: Casinos in Las Vegas have laid off hundreds of workers as visitor numbers and spending plunge. -- BLOOMBERG
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LAS VEGAS - FOR decades, this gambling centre seemed nearly immune to the economic swings of the rest of the country. But these days, the city built on excess is seeing a troubling sign: moderation.
Gambling revenue and hotel occupancy are down. Resorts are slashing room rates and offering coupons or free nights. Casino operators are firing hundreds of workers, and their stock prices have plummeted since October.
Credit is drying up for hotel and condominium projects planned before the slowdown hit.
Those still coming to Las Vegas are spending less. Ms Julia Lee, 27, of Los Angeles said she normally brought US$10,000 (S$13,600) on her trips here to play blackjack.
As she picked up show tickets the other night, she said she had brought less than half that amount on this trip. 'My parents are in real estate, and we're worried,' she said.
So are this city's hoteliers, retailers, wedding chapel operators and anyone else who depends on the extravagance of gamblers and tourists.
The spending declines are relatively modest - a few percentage points here and there. But Las Vegas has a huge inventory of new casinos and hotels due for completion in the next few years, and a long national recession could send the city reeling.
The Vegas outlook would be far worse if not for foreign visitors. The Las Vegas Convention and Visitors Authority reports that the average foreign visitor spent US$1,200 for purposes other than gambling last year, up from US$1,159 in 2006.
They are taking advantage of the low dollar to savour the fare of celebrity chefs such as Alex Stratta and to snap up goods that might cost twice as much in Europe.
To manage the slowdown, Las Vegas is revving up an overseas marketing campaign, and in the United States, it is pitching spontaneous Vegas escapes. 'Do it without thinking!' says one television spot.
But foreigners, who account for only 13 per cent of visitors, can take up only so much slack. Deutsche Bank recently started foreclosure on a US$760 million construction loan for the Cosmopolitan Resort and Casino, a partly built project in the heart of the Las Vegas Strip.
Crown Las Vegas, a bullet-shaped hotel and casino resort that was supposed to become the tallest building in the city, was scrapped a few weeks ago due to lack of financing.
And one of the most prominent Las Vegas casino operators, Tropicana Entertainment, filed for bankruptcy protection on Monday.
The Chapter 11 filing underscores a decline in the fortunes of US casinos as the gambling boom of the past few years fades in the face of an economic slowdown.
'In this market, it is not good business to be confident,' said Mr Jan Jones, a senior vice-president at Harrah's Entertainment and a former Las Vegas mayor.
'I've never seen an economy like this nationally. Nobody knows how deep what nobody wants to call a recession will go.'
Historically, Las Vegas has been resistant to recessions, entering them later and exiting them sooner than the country at large. Gamblers, particularly high rollers, tend to play whichever way the economic winds are blowing.
But executives here worry this recession could be different from the last two - in 1990-91 and 2001 - when consumer spending was propped up by easy credit.
Now credit is drying up. And high petrol and food prices, declining home values and rising unemployment are keeping many Americans closer to home.
More important, over the last two decades Las Vegas has shifted from a destination dominated by gambling to one with more appeal to middle-class shoppers, diners and golfers.
Whereas gambling represented 58 per cent of revenue for Las Vegas Strip resorts in 1990, it represented only 41 per cent of revenue last year, according to a Deutsche Bank report.
As gambling was legalised in more parts of the country in recent years, Las Vegas was forced to expand its own offerings to keep growing. It worked, but it made the city more susceptible to recessionary declines in disposable income.
NEW YORK TIMES
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