Recession brings 'Las Vegas dream' to an end
The 7,000-room, US$11 billion CityCenter resort is about to open in Las Vegas. But its timing could not be worse
By Andrew Clark
THE GUARDIAN, LAS VEGAS
Monday, Jun 29, 2009, Page 9
The lavish US$11 billion CityCenter complex will boast a casino, four hotels, luxury apartments, a fire station and even an on-site power station. But its timing could hardly be worse.
A joint venture between the casino operator MGM Mirage and Dubai World, the vast development in Las Vegas is the biggest privately funded construction project in the US. It is billed as
After a quarter of a century of phenomenal growth, Las Vegas has come to a shuddering halt. The seemingly endless supply of gamblers has dried up. So has the conference trade, hardly helped by a warning from US President Barack Obama that bailed-out Wall Street banks should avoid
Always good value, Vegas hotels have had to slash room rates by 30 percent to fill beds. Downtown casinos are offering rates of barely US$20 a night. The four-star Las Vegas Hilton, where Barry Manilow is a resident performer, is offering rooms for as little as US$39.
Local unemployment has reached 11.1 percent, compared with a national average of 9.4 percent. And a spectacular collapse in the local housing market has left seven out of 10 homeowners nursing negative equity.
On the city Strip, two huge building sites are eerily quiet. Fontainebleau, a half-finished US$3.9 billion casino that intended to offer perks such as an Apple iMac computer in every room, went bust this month. Echelon, a US$4.8 billion resort that was bankrolled by Boyd Gaming, ceased construction last year.
The much-vaunted CityCenter complex is far bigger. But MGM almost had to pull the plug in March when its partner in the United Arab Emirates declined to stump up toward a US$200 million equity payment. The project was within hours of bankruptcy when MGM
He points out that 8,000 construction workers would have been laid off and the promise of 11,000 permanent jobs would have been lost.
He admits:
Just as Detroit depends on the health of the motor industry, Las Vegas relies on gaming for its lifeblood. Some 37 million tourists a year are lured by a heady mixture of gambling, sunshine, star-studded shows and nightlife. The city But expansion had spun out of control.
The city was at the center of the sub-prime mortgage crisis after lenders handed out unsustainable home loans. Some 35,000 houses and flats now stand empty. Keith Schwer, an economist at the University of Nevada in Las Vegas, says:
Eager to move away from its historical association with adult entertainment and organized crime, Las Vegas was heading upscale when the economy plunged. The 1990s era of themed kitsch, which gave birth to the pyramid-shaped Luxor resort and Excalibur Wynn Las Vegas, boast restaurants inspired by leading celebrity chefs, designer boutiques, spa treatments and extravagant hotel suites with floor-to-ceiling windows. But top-class accommodation is a cyclical game.
Brian McGill, a gaming analyst at stockbroker Janney Montgomery Scott, says:
