Steve Wynn’s new Encore resort is just what Vegas doesn’t need right now—more high-end hotel rooms. Some friends of mine just stayed at the nearby Venetian resort for just $119 a night with $100 in restaurant and other credit thrown in as an enticement. They said they’d never seen the Strip so free of traffic.
The tough economy and abundance of rooms has casino builders doing their best to cut back. Among the high profile projects that have been shut down or put on hold in recent years are Boyd Gaming’s Echelon resort, George Clooney’s Las Ramblas, a Waldorf=Astoria and a W hotel.
A new report from Deutsche Bank analyst Bill Lerner screams “We have never tracked a greater number of stalled projects in Las Vegas than today,” some 41,000 new room cancelled. “What a difference two years makes.”
Lerner now forecasts that 25,000 new rooms will open over for the next three years. That’s half what he had been predicting a year and a half ago. Lerner figures at least one more project could enter the “bone yard.” Among the new ones still expected to open, MGM’s massive City Center in late 2009 and the Fountainebleau in 2011.
The city’s condo hotel market has also taken a hit.
According to Lerner: “Since the end of September, we have identified only 37 units closed
at the four actively closing high-rise condo / condo-hotel projects
we track (Allure, Palms Place, Panorama and Trump 1; there have been
no additional closings at MGM’s Signature III since we began tracking
earlier this year). This works out to be just over three closures per
month per project, or significantly below the theoretical average of
100 units per month per project in the prior economic environment.
Palms Place has now closed nearly 60% of its units, while Allure
(condo-only) has closed nearly 50%, with Trump 1 still below 25%
Still. a recent review of the Encore in the Los Angeles Times concludes: “That dry desert floor outside town is littered with the corpses of pundits who have proclaimed that Las Vegas is overbuilt. And there’s probably a special section in that cemetery for people who underestimated Steve Wynn.”
Happy New Year everybody! Here’s to a better time in ‘09.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.