The following is a post that I wrote on Vegas Fanatics.com in response to the thread: Why I broke up with MGM
The entire thread is a good read on how people are currently feeling about the Las Vegas Strip and why I believe that the current business model they are pursuing is unsustainable.
As bad as MGM is, Caesars might even be worse. From unkempt properties to poor customer service to throttling comps the Las Vegas Strip is no longer about gambling. It's about conventions and day clubs and night clubs and too-expensive restaurants and the $25 cocktail at the bar. Gambling is just another thing to do on the Strip and, outside of a handful of really, really big players, they really isn't any incentive for them to cater to the gambler any longer.
Why give away a room to a player who might gamble say....$10,000 over a couple of days when you can charge someone a sales rate for a room over a weekend and they and their friends will rent a pool cabana, get bottle service, eat at the nice restaurants, go to a night club and get more bottle service, spend a ton of money on liquor, maybe gamble $1000 over the entire weekend, lose it all because they aren't serious about it, and walk away with a weekend spend of higher than the gambler?
This is why you're seeing the de-theming of Harrah's, why all of the Mardi Gras decorations are gone. Because conventions don't care about themes, they care about meeting space and restaurants and activities.
Once the corporations took over Las Vegas, and realized they could make just as much, if not more, money on other amenities outside of gambling (with no risk BTW) the writing was on the wall. By "no risk" I mean that there's no chance a "hot run" at Ka is going to destroy the quarter's profit. There's no chance someone renting a cabana is going to hit a Wheel of Fortune Jackpot. these revenue streams are easier to trend and trending are things that CEOs who have read a few management books really like to see.
All that said, here's why I think it's not going to get any better.
For all of their faults, and there were many, in the past Las Vegas had visionaries. People like Jay Sarno, Steve Wynn and, to a lesser extent, Sheldon Alderson. Casino owners who had a vision for what they wanted Vegas to be and they weren't afraid to take risks to get it, and most times, lose it. What you have now are management-school bred MBAs who are running things and making decisions not on some vision, but on trends, projections, budgets and financial reports. People like to say the "bean-counters" are running things. That's not true, but the people who are running things are solely looking at the numbers the "bean-counters" provide and are using that solely to make business decisions. There's not one casino owner in the C-Suite on the Strip who's thinking "I wonder what comes next?"
The closest you have to that in Las Vegas right now are the Stephens brothers and Circa, which really was a visionary property in the downtown area. Yes, it's just like having the best house in a bad neighborhood but people seem to be flocking to that best house and their 21+ rules really don't seem to be hurting them. In fact, it seems to be helping them. They built a monster Sports book (truly one of the best places to watch a game in Las Vegas) and a pool that is also built around sports. They've turned The D into a place that's a must-visit and while they need to invest in it (especially the HVAC system) they have an undeniable piece of Vegas history in the Golden Gate. While they say "never say never" when it comes to eventually purchasing a Strip property I would think that's a long way out. What they're probably hoping for is that one of the big two corporations decides to bail on Vegas, which could happen eventually. (again, eventually being a LONG WAY out.
As with anything however, this worm will turn. Prior to the pandemic articles were already being written in the national media about the perceived lack of value on the Strip. Even before the shut-down their were worrying signs that people were starting to look other places as travel destinations. Occupancy rates were starting to dip on the Strip. Gaming was declining on the Strip and increasing downtown. Post pandemic this all changes as people just want to get out of their damn houses and cut loose.
That will change however. And when it does guess who the Strip casino operators are going to look to in order to bail them out?
That $10,000 gambler who they all but jettisoned when times were flush. My hope is most of them have moved on by the time this happens.
