Las Vegas continues to suffer from the crisis, yet luxury seems to have found it way
The World Capital of gambling and entertainment, the legendary American city of LAS VEGAS has been strongly hit by the financial crisis, with a direct impact on both gambling and hotel revenues. Particularly affected have been the large scale properties downtown and the ones outside Vegas. Ritz Carlton announced the closing down of its property in Las Vegas by May this year, laying off hundreds of employees. MGM MIRAGE, the largest casino and hotel operator in Las Vegas has also had to cut its work force gradually since the debut of last year. In a recent interview to a local tv station, Mr Jim Murren, CEO of MGM MIRAGE admitted his company has been hard hit by the crisis, the most difficult issues to deal with being the employee lay offs. However, he also expressed his belief that Vegas will recover gradually and he cited December 17th 2009 as one of the few recent positive moments as a turning point. On that date, MGM opened the 4.000 room hotel and casino ARIA as well as the MANDARIN ORIENTAL Hotel. Both properties are co-owned with troubled UAE investment fund DUBAI WORLD.
Clearly the opening of the new properties has created several thousand jobs, yet occupancy rates continue to remain low, pushing down rates both leisure and corporate. According to analysts, nowadays gambling revenues equal gaming revenues, which makes it even more difficult for management to pursue a long term strategy.
The two new hotel openings are also directly affected by the lessening number of shows, in particular top music stars like CHER or CELINE DION no longer performing in Las Vegas, although rumours indicate they might be back. Therefore, non gaming travellers do not have many entertainment options, except dining and a limited number of night clubs.
Both hotels have also opened spectacular SPA’s, yet the traditional Las Vegas traveller is not an obvious consumer target. It will take time for both SPA’s to create awareness as well as educate certain loyal Vegas customers as to this relatively new leisure option in the city.
Despite the effects of the crisis especially on hotels and casinos, the luxury retail sector has been showing great signs of improvement, especially with the opening in December of the first luxury stand alone shopping center called CRYSTALS (by the Mandarin Oriental) which is dedicated to luxury fashion, accessories and jewelry brands. LOUIS VUITTON, VERSACE, BVLGARI, TOM FORD, HERMES, ZEGNA, ROBERTO CAVALLI, DE GRISOGONO have already opened impressively lavish outlets and PRADA, DIOR, GUCCI set to open by Spring 2010. A smaller luxury shopping gallery was also opened on the groundfloor of the Mandarin Oriental Hotel, CAROLINA HERRERA opening a flagship store.
Mention should also be made that, despite these new opening, the luxury retail sector in Vegas is still suffering and that is why, brands such as HERMES have closed their previous location at Bellagio Hotel to open a new one at CRYSTALS. Oliver Petcu of CPP believes there will be further movements, several other important fashion and accessories brands will relocate their shops from the Bellagio to the CRYSTALS.
The most important consumer target for luxury fashion and accessories brands is Asian travellers, who visit Vegas especially for gambling. However, since the spectacular boom of the casino city of MACAO in Western China, more and more Asian tourists are lured there. One of the biggest advantages of MACAO is the proximity to all major Asian cities.
It remains to be seen how LAS VEGAS will compete with MACAO for the Asian travellers as well as continue attracting its loyal American customer base.