Sep. 11, 2004 - Las Vegas, the city of 24-hour action, came to an eerie halt when two commercial jet airliners slammed into the World Trade Center in New York City and another struck the Pentagon in Arlington, Va., on Sept. 11, 2001, the most egregious act of terrorism ever witnessed on U.S. soil.

Slot machines stopped ringing, roulette wheels sat idle, playing cards lay dormant.

Casino dealers stood at tables with their arms crossed, waiting for gamblers who seldom arrived.

The effects of 9-11 were numbing for Americans who tuned in to live television coverage that morning and watched in disbelief as the twin towers crumbled to the ground in smoke and ashes.

In the days and months that followed, the economic impact on Las Vegas was devastating.

Gaming revenue and visitor volume plummeted after the Federal Aviation Administration completely shut down air travel, the lifeblood of Las Vegas' tourism-based economy, for three days and people became wary about flying.

Over the next few weeks, Strip hotels laid off employees by the thousands. From a business standpoint, nobody knew when the next dollar might come through the door.

"Businesses were really concerned, and for good reason," said Jeremy Aguero, principal of Applied Analysis, a Las Vegas research firm.

"They tightened their belt and streamlined operations, not only gaming but other businesses. Whether it was gaming or office development, they became much more cautious about their expansion plans."

Attendance at Comdex, the giant technology convention that regularly drew more than 200,000 well-heeled visitors to Las Vegas during the traditionally slow month of November, slipped to 110,000 in 2001, accentuated by the absence of international attendees.

It took about six months for Las Vegas to get back on its feet.

Starting with a trickle of passengers returning to McCarran International Airport and steady drive-in traffic from regional feeder markets, the local economy slowly recovered.

McCarran was averaging more than 3 million passengers a month until the number dropped to 2.1 million in September 2001 and remained below 3 million until March 2002.

Gaming revenue for Clark County fell from $650 million in August 2001 to $595 million in September and stayed below year-ago levels until February 2002.

Hotels were discounting rates like car dealers to maintain occupancy levels, which had fallen from 90 percent to about 70 percent.

The numbers improved as 2002 progressed, following the national trend, said Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

The U.S. economy had already slipped into a recession in March 2001, and the events of Sept. 11 compounded the problem.

"When we look at the impact of 9-11, it kind of lengthened the recession that was ongoing. I think if we didn't have 9-11, we probably would have recovered faster," Schwer said.

There were peaks and valleys, but overall, the Southern Nevada Index of Leading Economic Indicators continued to climb throughout 2003 and early into this year, peaking in February.

Construction activity and job growth carried Southern Nevada's economy in the aftermath of the terror attacks. More than 6,000 people a month continued to move here.

"A major factor since then was that construction activity was very robust relative to travel and tourism," Schwer said. "Let's remember that the Fed (Federal Reserve) started dropping interest rates in 2001. That reduced borrowing costs for homeowners and for business investment. That stimulated housing construction and business activity here."

New-home sales, which had set a record at 22,940 in 2001, dipped slightly to 22,502 in 2002 then rebounded to 25,230 in 2003, according to Home Builders Research. They're on pace to reach 28,000 this year.

The Las Vegas Convention and Visitors Authority reacted quickly to the terror attacks with an advertising campaign aimed at regional drive-in markets.

"What we did right after Sept. 11 was pull back all of our advertising and determine when we should go back out," said Rossi Ralenkotter, president and chief executive of the tourism agency. "We went out and did research to find out when we should get back into the marketplace."

Much of the authority's advertising efforts before the terrorist attacks showcased the product in Las Vegas: hotels, dining, shopping and entertainment.

New ads, called "Vegas Stories," played upon the branding of Las Vegas, the freedom here from everyday stress and routines.

"Las Vegas is a great escape for people to get away from what's happening," Ralenkotter said.

Travel and tourism experts said Las Vegas was among the first leisure destinations to recover from the Sept. 11 disaster.

Visitor volume fell from 35.8 million in 2000 to 35 million in 2001 and 2002, then came back to 35.8 million in 2003 and is projected to top 37 million this year, Ralenkotter said.

Room inventory grew even though no new megaresorts opened on the Strip.

The Stratosphere, The Venetian, Bellagio and Mandalay Bay have each added about 1,000 rooms since Sept. 11, and off-Strip hotels such as the Palms and Green Valley Ranch brought the total number of hotel rooms to more than 130,000, up from 125,000 in 2000.

Another 8,000 rooms are currently under construction, including about 2,700 at Steve Wynn's new Strip development, Wynn Las Vegas, scheduled to open April 28.

The past three years have also seen an increase in convention and meeting space, shopping, dining and entertainment venues.

"That shows the confidence that investors and corporations have in Las Vegas," Ralenkotter said. "We've got $3 billion under construction in the resort corridor."

Real estate investors and developers also remained bullish on the market.

"One of the things that helps Las Vegas is it's a fast-moving city. It can turn on a dime," said Alex Edelstein, developer of the Manhattan condominium project on Las Vegas Boulevard South. "This is a city that's quick to adapt to change."

Projects such as Madison Towers mid-rise condos by Turnberry Associates and Hilton Grand Vacations Club time share on the Strip were put on hold after 9-11.

"This hasn't been exactly an easy task," Antoine Dagot, chief executive of Hilton Grand Vacations, said at the February opening of Hilton's project. "We started on it before Sept. 11, then we stopped construction. We didn't know where we were going."

-----To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

(c) 2004, Las Vegas Review-Journal. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected].