Shrinking Middle Market?

[Hunter]

I wrote a quick article/breakdown on what seems to be a trend - the shrinking of supply in room market for mid-range rooms.

What do you guys think? Anything to this?

http://www.ratevegas.com/blog/2006/03/what_happened_t.html

[Coaster Kikky]

I've actually given quite a bit of thought to this, as I am "the source" of Vegas information in my office. More than one co-worker has asked me where they can stay that's nice but won't break the bank. Several times when I've searched for them, I can't find anything much under $179 a night. Paris and Aladdin used to be quite reasonable, but often their prices lately are astonishing. Monte Carlo, Ballys and Luxor are the places I consider middle of the road in pricing now, and sometimes TI. I usually end up recommending one of those once I determine what their trip priorities are: sightseeing, gambling, food, pool, or they think they're going to do it all in 3 or 4 days. I always tell them IF they're going to gamble, get a players card as that is the only way they're going to get future offers should they want to go again (which happens damn near 100% of the time).

I think/hope that the places I mentioned, and Hunter mentioned - the Ballys or whatever it becomes, Monte Carlo, TI, etc - find the high-end market saturated with all the new rooms under construction and see fit to lower their prices to maintain decent occupancy. I love Downtown but it doesn't appeal to everyone, and Off-Strip seems, to me, to be looking at a bright light on the horizon but being unable to touch it. To be a part of that bright light, you need to be on the Strip.

[sin]

I'm in agreement on this one. As everyone knows, I whine like there's no tomorrow when the "budget" properties are closed only to make way for some new "upscale" extravaganza. I honestly don't think that places are going to be able to continue to command these prices. For example, I LOVE the trashy castle, but I can't even afford to stay there. Everytime I check pricing they want $200+ a night. I think the market will bust for these outrageous room rates eventually, but sadly, probably not until the high dollar marketers are done building their monstrosities. City Center, Eschelon, etc. are hopefully going to break the proverbial camel's back and then maybe the middle will once again have a decent room at a decent price.

[Ringo]

Hunter, I agree 100%. Vegas is getting more expensive very rapidly, way beyond just the rate of inflation. And it's not just hotel prices. Restaurants are getting more expensive, table limits are going up (and rules are getting tighter), and so on. But on the other hand, the level of luxury available on the Strip is also way up from where it was even a decade ago, so the "bang for your buck" is still pretty decent in my opinion: It's a lot more bang for a lot more bucks. It's all a matter of supply and demand. The Vegas experience is in high demand. There's only one place in the world you can find it, and a lot of people are willing to pay whatever price necessary to get it. And add to that the Vegas culture of excess. Most people will want the best experience they can possibly afford (or charge). Property owners would be silly not to charge as much as they could as long as their rooms are booked. Eventually the high-end market will saturate and prices will probably start to level out. Whether that level of saturation is one fancy mega-resort away or ten fancy mega-resorts away is the question. We customers are hoping the answer is one, and casino operators are hoping it's ten.

[LVLady]

In searching for rooms for our coming trip, I am having a hard time finding what we want for under 150 a night. I am talking Mirage, TI etc. I expect to pay around that for Bellagio, but their rates are 259!! Heck Wynn is less than Bellagio, but still I can't see paying over $200 a night for a room!! I am not sure what the powers that be in Vegas are thinking. The other thing I don't understand is how these 20- somethings that Vegas is catering to these days can afford the high room rates etc. Maybe they are fitting 4 people to a room and the price isn't bad when you do that. I have no idea.
Hopefully the summer specials will but out soon and they won't be THAT much more than they were last year.

[doctor_al]

Property owners would be silly not to charge as much as they could as long as their rooms are booked. Eventually the high-end market will saturate and prices will probably start to level out. Whether that level of saturation is one fancy mega-resort away or ten fancy mega-resorts away is the question. We customers are hoping the answer is one, and casino operators are hoping it's ten.
That's it exactly. LV operators are very good at maintaining high occupancy, i.e., filling rooms. They will adjust rates to do so, but if it turns out that they don't need to discount to stay full ... then welcome to "off-strip", which is where, I think, "we the frugal" are headed.

One caveat is that we don't know what Harrah's is going to do with their redevelopment, but I don't see "upscale palace" meshing with their nationwide slot-player customer base. On the other hand, why would you spend a billion dollars to make just an average hotel?

[Denny]

Responding to LV Lady about the 20 somethings affording these hotel rates. The rates don't matter to them. They are the "instant gratification" generation who will pay whatever, stay wherever, whether they can afford it or not.

[JerryGuitar]

Responding to LV Lady about the 20 somethings affording these hotel rates. The rates don't matter to them. They are the "instant gratification" generation who will pay whatever, stay wherever, whether they can afford it or not.I resent that...however true it may be.

[sageblue]

The Vegas experience is in high demand. There's only one place in the world you can find it, and a lot of people are willing to pay whatever price necessary to get it. And add to that the Vegas culture of excess. Most people will want the best experience they can possibly afford (or charge).

I think there are two important points there. First, Vegas is unique, and most people--outside of this community and its ilk--go to Vegas infrequently enough that they are willing to spend a lot of money to "do it right" (whatever that means) when they actually do go. Second, I think that, considering the debt rates in this country, many people charge everything but their gambling money and worry about it later. Sad but true.

As for the age range, I see all sorts of ages in Vegas, and everyone who is gambling is looking for instant gratification. Are there a lot of twentysomethings spending above their head, not with it? Definitely. But I also see a lot of fiftysomethings in line at the Orleans cashing their paychecks. ;)

The other thing to think about here is that perhaps Vegas will begin going the way of AC. Last year in an article (http://www.hotel-online.com/News/PR2005_3rd/July05_CompRooms.html) in the Philadelphia Inquirer, they talked about comp rates for AC's hotels:

About 32 percent of Atlantic City's casino hotel rooms were comped in 1988. That number had reached 54 percent in 1995 and escalated to 64 percent in 2000. Last year, 68 percent of the city's rooms were given away free.

Also, the article states that Borgata's comp rate at the time was over 90%.

The more that Vegas properties cater to their club players and offer free or discounted rooms (I'm still amazed at how much GVR offers me for how little I played there), then perhaps the room rates for non-club players will rise (you should see some of the rates they ask for in AC on weekends), or perhaps that is what we are seeing now. Good article though Hunter--Thanks.

[RossW]

I don't see "upscale palace" meshing with their nationwide slot-player customer base.

As tight as the gaming has become in Las Vegas as of late, that may be the exact plan. The more the casino corporations keep, the more they have for building the "upscale palaces". It seems with the odds changes in a few of the table games, the skimping on freebies such as drinks, comps, eats, etc, the shift of Vegas is to squeeze even more out of the visitor and/or gambler.

I've found even the fun of playing slots and the time that your initial investment lasts once you have dropped that loot into the machine has dropped dramatically. I know the whole slot thing is random, when the jackpots and such are to hit, and that machines cannot be "set" so to speak, but can the "return" the casino would like to reap from that said machine be set? That, I don't know about. I would assume so though, they must have some control on the payouts the machine produces and what the casino can reap from it.

The average Las Vegas traveler isn't as informed and as "in the know" of all the negative gaming aspects that have come down the pipe of late, like the folks who frequent this place, and think Vegas more often than the "average Joe".

Most only think Vegas when booking their trip, and then are in the groove for the 3 or 4 days once there, and that’s it. They don’t think about the city until the next time they decide to go. I bet a large portion don’t even really know or worry about the change from 3:2 odds to 6:5 on their favorite blackjack game. Some wouldn’t even be able to explain the difference in the payout……Most are just there for 3 or 4 nights, they party hard, gamble hard, see a show maybe, etc, etc.. And then it is back to reality. The majority I would think, have already set aside the gambling "loss". It’s part of the overall trip expense.

These are the people the casino corporations are out to seduce. Not Las Vegas travelers like us T2Ver’s that dissect the thing down to the very marrow and have a keen interest in the town and all that is going on and constantly changing within it.

In a nutshell, if the potential or "average" Las Vegas visitor becomes more "informed", that would spell disaster for the interests of "Las Vegas Inc." I don’t see the squeeze on the middle-class low roller working in Las Vegas for an extended period. My guess is it may work for a while, but once the middle class Las Vegas visitor does become informed, or else becomes tired of being monetarily molested and figures the whole thing out, Las Vegas will once again be forced to re-invent itself, and share some of the wealth.

Heaven forbid a downturn in the economy, that would bring the whole thing to a screeching halt. As long as things are "flying high" and the economy is on fire, Las Vegas will reap the rewards, otherwise, it may get slow in the desert, real quick. Gambling, and even traveling for that matter, are some of the first things on the chopping block, if folks need to tighten their spending. One doesn't *need* to travel. One *wants* to travel.

Edited to add: High cost rooms just don't make a whole lot of sense, sure the WOW factor is nice when you first walk into them, but the hotels want you downstairs with your wallet open, dont they? They don't want you hanging out in your room. I don't really get the "fancy room thinking". Sure, we all want a nice room, but isn't gambling the goal that "Las Vegas Inc." is trying to get it's visitors to pursue? Next thing you know they will have online gaming on the TV in your room or at a computer set up on the writing desk beside the bed.

Just an opinion.

RW

[ken2v]

... Edited to add: High cost rooms just don't make a whole lot of sense, sure the WOW factor is nice when you first walk into them, but the hotels want you downstairs with your wallet open, dont they? They don't want you hanging out in your room. I don't really get the "fancy room thinking". Sure, we all want a nice room, but isn't gambling the goal that "Las Veas Inc." is trying to get it's visitors to pursue? Next thing you know they will have online gaming on the TV in your room or at a computer set up on the writing desk beside the bed.

Just an opinion.

RW

It's been a couple years now since the needle shifted over to the side where non-gambling revenues account for more than gambling revenues along the Strip, and at that time only a point or two separation existed for the off-Strip and downtown properties. I think it is safe to say that casinos would rather have people spending coin in the casino since it's cheap to add more machines and tables versus another Cirque show or 400 thread-count sheets across 4,000 rooms, but they're smart enough to take it from whatever sources are in demand.

The I-don't-get-the-high-end/low-end-room debate never will be settled because whichever one is important to you will carry the debate for you.

I don't think the AC comparisons are apt. Seems to me AC is ALL about gambling, and as the interests here and the even broader interests manifest in the larger public show, Vegas is about everything.

As for Hunter's premise, yes, anecdotally and I believe quantitatively if anyone had run the numbers, there is a shift, but I'd tweak it a bit and say the entire market is shifting upward.

[RebelDiceMan]

Nice Post Ross. Well thought out and expressed well. You are certainly right that a recession or even a travel scare such as we experienced after 9/11 would do dramatic things to the cost of the rooms. I probably shouldn't be this way, but room cost is a pretty big factor on planning a trip. I have gotten a little spoiled the last 4-5 years and just about won't go if I have to pay for the room. That is not a hard and fast rule or anything, it just makes it so much easier for me to justify going if I have free rooms. They are getting harder to come by as prices go spiraling up. Luckily, I can usually go during the week and those offers haven't dried up like my weekend offers have increasingly done.

[boxcars]

Babyboomers are loaded with $$$$ as a whole. Over time, room rates are bound to go down. Could take a decade or two... but I can't see this Vegas upswing lasting forever. I hope not. If so... I'm done with Vegas. I'm a low roller who just wants to have a little fun.

With money like what it takes in Vegas these days, I'd rather head to Tahoe.

[magland]

I've noticed quite a change in just the last few years. Table limits are up, room prices are up, but the nicer casinos are still packed. I try to get to vegas about every year, so I'm usually looking for a good deal. I'm not looking to spend $1000 for a few nights in a room, but I think there are a million people who will. It makes me laugh when first timers ask if the Bellagio or Mandalay Bay are nice places to stay.:vomit: Apparently the $300-$400 a night doesn't clue them in on that. I guess that's my point. If you are willing to spend that kind of money and not know you are in a 4 star plus hotel, than vegas can keep demanding a whole lot of money. Once a few more of the older casinos get demolished, the strip will be about out of reach for the average joe in about 10-15 years. Unless you're coming with a bankroll, you will be staying off strip and getting shuttled there. I hate to see it turn out that way, but it sure doesn't look good.

[DonD]

you will be staying off strip and getting shuttled there. I hate to see it turn out that way, but it sure doesn't look good.
If we do our gambling and spend our money at the affordable places, they will stay in business. Visit the glamor joints, but spend your money where the deals are at. I have always played at the places that take care of me.;)

[delo]

If we do our gambling and spend our money at the affordable places, they will stay in business. Visit the glamor joints, but spend your money where the deals are at. I have always played at the places that take care of me.;)

That's why we spend most of our time in Harrahs properties. Eventhough they changed up their comp system and tightened their machines, it still seems to the best bet for us. We had both Connection cards and Total Rewards, and now we are in hog heaven.

We have cards at MGM and Venetian, but they have NEVER given us anything eventhough we have played there quite a bit. Played at MGM and NYNY a lot.:confused: The One Club occasionally sends us casino rates, but that is all.

[GMS]

welcome to "off-strip", which is where, I think, "we the frugal" are headed.


I crossed that bridge about 5 trips ago, and am pretty much now a Coast loyalist. I still spend plenty of time on the Strip and Downtown, but when I'm ready to plan a trip, I always start by looking at what the Orleans rate is.

And most of the time, nobody beats 'em.

-GMS

[DBear]

Isn't that what Vegas is all about? The chance for us minimum wage earners to feel like a million bucks, just for a few days. To live in luxury and opulance for just a couple hundred dollars. They build because we pay.

[hedo3cpl]

It's true that the rooms have risen a little bit,But that is the price we are paying for the super resorts,and that is not going to change in the near future.we still feel we are getting quite the Bang for our Buck!
Doug and Patty

[Dean Martin]

I could be off base here but I think one possible cause is the pressure put on the Vegas (room/hotel/casino type resort) market by Katrina. Living in Va, we used to go to LV once a year and to Biloxi once a year. Now we go to Las Vegas twice/yr. We've only stayed at the Beau Rivage down there but it was a beautiful place and had every bit of a "Las Vegas" feel. When they get things back open down there I would bet they'll have some great room rates and hosts will be working hard to "woo" old customers back. Plus... it will all be brand new. IMO, that will take some pressure off of the LV room rates and put some pressure on the market there to be a little more competitive.

I just hope MGM doesn't re-do the BR to look like any of the changes they're making in the Mirage. I still like Bellagio, I just choose to ignore the fact that Mc-MGM owns it now.... :rolleyes2:

[QuadzillaXXX]

That's it exactly. LV operators are very good at maintaining high occupancy, i.e., filling rooms. They will adjust rates to do so, but if it turns out that they don't need to discount to stay full ... then welcome to "off-strip", which is where, I think, "we the frugal" are headed.

I have to agree with you on the off-strip location there Doc. My g/f and I are staying at the Orleans this year for our first few nights then downtown the last few. We seem to just keep changing locales. First we stayed strip, then downtown, now it's off-strip/downtown. We've pretty much just picked the best deals we could find every trip and haven't been disappointed yet....they just keep getting tougher to find.

[21wins]

I agree, the room deals are harder to find.

Since September I have stayed at Tuscany, Terrible's, Main Street Station and The Gold Coast and LV Hilton

All offered either comped rooms or deals(some with coupons others not).

I was not disappointed in any of the rooms. Of course all I request is a clean room so I am not too hard to please.

For those who haven't stayed there the Tuscany is real nice. All rooms are mini suites.

Although I've noticed their room rates are creeping higher so maybe the secret is out.

[QuadzillaXXX]

This is a bit off topic but after you mentioned the Tuscany I checked out the website and was really impressed. How far off the strip is it..walkable?
The Orleans really appealed to us because of the free shuttle to the BC.
Thanks

[21wins]

Bit of a walk down East Flamingo. It's doable from the strip.

Very nice rooms and the pool area looked good.

As I mentioned their room rates have gone up($79 & above) but you seem to get a lot more than you would for that price range on the strip.
Hope this helps.

[QuadzillaXXX]

Yes it does, thanks.

[dandaman]

I think there has been a huge swing in popularity towards Vegas.
There are many, many shows on the T.V. lately with Vegas colored glasses
along with the hugely popular poker tournements on almost any channel these days. Lots of hype and some good advertising for this city.
Hmmmm, I guess what I am trying to say that there is a certain trend towards going to Vegas almost to being a fad.
Hopefully this will wear off soon and the market will cool down a bit in Vegas.

[happyhour]

I honestly do not think that most of the nicer strip hotels are very expensive compared to the hotels at the beach resorts near my area..
I agree with the poster who said that the younger crowd is staying 4 to a room..which they don't mind..not me..I have gambled my way to a nice comped room or suite every visit to Vegas and I do not share rooms with just anyone..
I also believe if the money spent on your room is going to be an issue in Vegas..then try to go during the week and not on a holiday..which I know isn't easy for everyone.
and as other posters pointed out...you can go downtown or off the strip if you want a cheaper hotel...
or another way to go would be to book your room months in advance and pre-pay for it..then by the time you get to Vegas..it won't seem so bad as there will be no more money out of your pocket...I know it would still not be cheaper..but the mind plays wonderful tricks on us....


Atlantic City,N.J. ...you can't get a descent room on Sat. night in the summer for under $300... winter is still $150. and up..during the week is cheaper..off season isn't too bad.
Ocean City,Md. is another one where a nice hotel will cost you over $300. a night...and yes that's in season..but, that is when you want to go to the beach.
Annapolis,Md. has either very nice hotels or bottom of the barrell..and the nice ones will cost you over $300. a night during the week..if you stay at one of the cheaper ones..yes it will cost under $100., but all they will do is leave the light on for you!
Washington,D.C. is another very expensive city to stay in..no descent rooms for under $250. ..but, the advantage there is..most of your museums and sight seeing interests are free.

MOO :) :wave:

[21wins]

Happyhour,
I agree that on face value the rooms at the 4& 5 star facilities are really worth what they charge compared to other vacation destinations.

However,
Speaking for myself as one who has been going to LV for a long time(19 years for me) I am so used to "deals" on rooms, food and entertaimenment that it's a bit shocking to see rooms for $250+ a night and $30 buffets and $125+ show tickets.

it's like the rest of the world found out my little secret and now it's not a secret anymore.

Again on face value LV is still a good deal for what you get. But it has gotten to be more of a vacation destination then "hey let's go to Vegas". Where you could justify losing some cash because everything else(room, food & entertainment) was such a great deal.

[nubia11]

I am right there with you, 21 wins. I am officially a 12 year Vegas vet as of this month and I share your sentiment. LV is still a great deal no doubt, but you have to get more creative with it these days, not to mention actually planning ahead. I've burned many brain cells with school, work, Ketel One and the like over the years but, if I recall correctly, my first trip cost a grand total of $175 for air and hotel. That was for 5 nights at the MGM with r/t from Kansas City! At that time, you could still find $2 and $3 Blackjack fairly easily, Binions still had great odds on craps, and many of the "upscale" properties still had late night specials at their coffee shops. Mmmmmm, $1.95 Ham Steak and Eggs....

On the flip side, I do take great pride in finding the deals these days. It's practically a hobby for me, the whole exercise of finding a better deal up until it's time to go. My husband fully expects that I will change our hotel at least 3-4 times before we leave and, usually, he's right. Not this time though. I've committed 100% to the Orleans for Mem Day weekend, which is my next generation "frugal" favorite. I mean, who else has has good, reasonably priced restaurants, decent VP, nice rooms, and an on-site liquor store to boot?

I know, my poor brain cells.