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As Las Vegas Visitor volume grows at only a slow pace and CityCenter adds hotel rooms to the city’s inventory, Las Vegas hotel occupancy has dropped.
Visitor volume – Up 1.5% compared to the first six months of 2009.
Room Inventory – 5.6% more rooms than the same period in 2009.
Hotel Occupancy – 80% for the first six months of 2009 (90% in 2007).
The following story from the Las Vegas Sun provides an in-depth look at how City Center has impacted the market and other Las Vegas hotels. With essentially the same number of visitors and more rooms, someone had to suffer, and occupancy is down at some properties. Also, the competitive environment has created a buyers market, and guests can stay at more upscale properties at rates unheard of in 2007. The Pulse has always believed that Las Vegas functions best in a buyers market, as the competitive environment benefits visitors. The hotel-casino accountants of the boom years up to 2007 would not agree.
The story also mentions how MGM Resorts has concentrated on high roller traffic at Aria to boost revenues. This is interesting in that MGM Resorts receives only half the revenue as Dubai World owns half the property. If those players gambled at Bellagio, MGM would receive all the revenue. The pressure to make City Center successful is huge!
Las Vegas Sun: Too Many Rooms To Fill: CityCenter’s Opening Felt, Even As Visitor Volume Grows
With more hotel rooms in Las Vegas than bodies to fill them, the evidence is growing that CityCenter is stealing more business from other resorts than it is creating.
The news might be worse for competitors than it is for MGM Resorts International, which owns the largest share of Strip resorts, including CityCenter, co-owned by Dubai World. Single-property resorts such as the Tropicana and Riviera have potentially more to lose because they are generating less cash to fall back on and lack a massive customer database to draw from.
Also, many customers are choosing to stay at fancier hotels that have lowered rates to maintain occupancy over budget properties that aren’t much cheaper.
Still, the $8.5 billion CityCenter is probably taking business from some of its less-opulent sister properties, CEO Jim Murren says.
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