Monday, February 16, 2009

All’s quiet on the Vegas Strip

Las Vegas’ normally bustling McCarran International Airport is line free and calm. The dealers at the Palms Casino wait behind empty Blackjack tables. And the cranes at dozens of half-built Strip hotels, condos and casinos aren’t moving. The recession has hit Vegas—and this time, the odds seem to be against the house.

This city has been a developers’ playground since about 2005 when Steve Wynn started a Vegas building boom with the construction of his high-profile Wynn Hotel and Casino. In 2007, Bill Lerner, a Deutsche Bank gaming analyst, said the city wouldn’t be able to staff the 51,000 hotel rooms expected to come online by 2012, according to a Jan. 25 article in the Las Vegas Review Journal. Since then, projects have tabled or canceled, and only 19 percent of those rooms will be built.

Among the project victims listed in the article: Harrah’s Entertainment postponed work on the $500 million tower expansion at Ceasars Palace. Boyd Gaming stopped construction on the $4.8 billion Echelon project in August, and will reduce the scope and size of the project when construction recommences. And Las Vegas Sands Corp. halted construction on the $600 million Strip condo high-rise, according to the article.

Now with most cranes stilled, criticisms are rolling in about the work quality on some projects, built up in such a rush during the boom. According to a Feb. 11 Las Vegas Sun article, the building boom resulted in 12 construction deaths, numerous injuries and notable construction problems, including recently released news of the midconstruction downsizing of CityCenter’s Harmon tower due to improper installation of rebar.

And to top it off, gambling is down … way down (hence my trouble-free McCarran experience, and the lonely card dealers). The casino operators are suffering and Moody’s Investor Services announced earlier this month that 17 operators are at a high risk of default. Rumor is that even Trump Entertainment may be filing for bankruptcy.

The Vegas downturn is far from over, according to Keith Schwer, a southern Nevada economist, and the city should brace for a long lull before its next winning streak.

Katy Devlin, commercial glass & metals editor, retail glass co-editor, Glass Magazine


William Davenport said...

I was there a couple of weeks ago for a show. From my room at the MGM Grand I saw lots of construction cranes hovering over the towers being built beneath them but none of them moved the whole week I was there. Driving by the construction sites they were ghost towns.

Like you I found that the majority of gaming tables were empty and few people sat in front of the slot machines. It is going to be a long cold winter--maybe for years--for Vegas.

Anonymous said...

Unless your working for Far East Aluminum @ the Cosmo

Marin Designworks Glass Tile said...

We at Marin Designworks Glass Tile Design have gratefully received a lot of business from Las Vegas hotels and resorts over the years - and we've definitely seen a drop in our commercial business. It just means changing our market focus for now the bulk of our business comes from high-end, architect-designed homes. Some people are still building which is great for contractors and associated businesses. I'm very sorry to see what's happening in Las Vegas - the downturn affects so many; however it's a cycle which means it will come around again. We all have to remain positive.

Katy Devlin said...

Thanks for all your comments. You're right, Marin Designworks, things will come back, and there is work out there, like that for Far East Aluminum. I spoke with some glaziers after I posted this blog who also said their Vegas work has remained fairly strong, despite the loss in hotel/casino work.

Rorique Vernon said...

I'm a freelance drafter, and the work out of Vegas has all but dried up. The downturn for me started in the late summer. After 15 straight years of pretty steady work it's very unsettling.

I'm hoping some of the government construction in the stimulus package will pick things up. But I don't see how it's going to get people to spend enough to make a place like Vegas roll again.

Las Vegas Hotels said...

My friend was in Las Vegas before 2 months. He told me that the people are still smiling and play roulette, the life continues:) He was very happy after he came back from his vacation. I think soon all the construction cranes will continue to build more and more beautiful hotels and casinos of this magic city;)