|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
March 19, 2012--Analysts at Moody's Investors Service in New York have become more optimistic about business conditions for hotel-casino operators on the Las Vegas Strip.
Hotel numbers in particular are looking better, Moody's said in a report Monday titled "Las Vegas Strip Gaming Recovery Brightens."
The report notes several improving trends in 2011, including a 4.3 percent rise in Las Vegas visitor volume from 2010 thanks largely to the improving U.S. economy. Nearly 40 million people visited Las Vegas in 2011, close to the city's 2007 peak.
Moody's noted that in 2011 there was a 3.5 percent increase in slot machine revenue and a citywide 3.4 percentage point increase in hotel occupancy, to 83.8 percent, the first increase since 2007.
With no megaresorts in the development pipeline following the December 2010 opening of the Cosmopolitan, owners of existing hotels now face less competition from new capacity.
"The improvements are supported by low growth in hotel room supply, which gives (existing hotel) operators more pricing power," Moody's said in its report.
"After suffering through a deep trough during the recession when visitor volume declined as new capacity came online, the Las Vegas recovery is under way," Peggy Holloway, a Moody's vice president -- senior credit officer, said in a statement. "Hotels are benefiting from increased visitor numbers that permit higher room rates, while gaming revenues are recovering, albeit more slowly."
Monday's report confirms year-to-year trends for January reported earlier by the Las Vegas Convention and Visitors Authority.
The LVCVA said that citywide, visitor volume for January was up 0.9 percent and the average daily hotel room rate improved 6.2 percent to $113.82 -- the 23rd consecutive month of increases for these categories.
Also, Nevada regulators said gaming revenue on the Las Vegas Strip in January advanced 29.16 percent on a year-to-year basis to $623.5 million.
While that increase was driven largely by volatile baccarat play, less-volatile slot machine play is showing slow but steady growth on Strip.
Through January, it was up 2.69 percent comparing the previous 12 months to the same 12-month period ending in January 2011.
Moody's noted there were concerns about how gasoline prices prices could affect business in Las Vegas, "as money that consumers would spend at the casino could be deployed to fuel spending.
"With crude oil currently trading at its highest level since 2008 and high gasoline prices, consumers could pull back on discretionary spending and travel to Las Vegas," the report said.
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