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Las Vegas Hotel Industry Wounded, But Rebounding

By Brandon Bailey, San Jose Mercury News, Calif.
Knight Ridder/Tribune Business News 

Oct. 12--LAS VEGAS--The Strip is crowded again. But so is the local unemployment office. 

After turning eerily quiet in the weeks after Sept. 11, this giant amusement park of a city is once again a draw for out-of-towners in search of a good time. They are thronging the neon-lit sidewalks to watch the dancing fountains at Bellagio, crowding the gambling tables at the Tropicana and waiting in line for shows like Blue Man Group and Cirque du Soleil. 

Yet people are also lining up every day at a giant tent next to the headquarters of the local Culinary Workers' Union. Inside is a makeshift disaster center, where state and private aid groups have set up tables to help the 15,000 hotel and casino workers who were laid off after the terrorist attacks. 

This is America's fastest growing city, a destination economy based on the premise that entertainment and travel are almost constitutional rights. How quickly Las Vegas rebounds may be one measure of how deeply the nation was wounded on Sept. 11, and how quickly it may heal. 

And if the city is a barometer of back-to-normal, this is the forecast: Eventual recovery -- the experts just aren't sure when. 

"Las Vegas has never been affected like this before. There is nothing to compare it with," said a spokeswoman for the local Convention and Visitors Authority. 

Since last week, hotel occupancy rates have been closer to normal, but analysts note that rooms are being rented at severely marked-down rates. Some employees who had been laid off were called back to work this week; others aren't sure when they'll see a paycheck again. 

"It's scary. We don't know how this is going to go," said Jasmine Williams, 27, a single mother of three who was laid off from her job in the corporate accounting department at MGM Mirage. She was called back last Friday, but for only two shifts a week. 

"This is going to have some lingering effects," said John Marz, a senior vice president of the Mandalay Resort Group, which owns five major casinos on the Las Vegas Strip. His company alone has laid off more than 4,000 employees, nearly 15 percent of its workforce. 

And because the Las Vegas economy is so anchored to the tourism industry, the downturn has rippled into other sectors. 

"I thought I was safe," said Suzette Sera, a 30-year-old office manager for a company that sells commercial software. When orders from hotels and casinos dried up last week, Sera was laid off. 

At least one local home builder has noticed a dip in sales, according to Keith Scherwer, an economist at the University of Nevada-Las Vegas. Some experts are predicting a slowdown in new construction. 

"If the hotels have less revenue, they are going to be spending less money. A number of companies that provide goods and services to the casinos are going to lose revenue, so we're expecting further unemployment," said John Knott, managing director at C.B. Richard Ellis, a commercial real estate firm. 

It's hard to gauge exactly how much business has been lost since Sept. 11. Scherwer had estimated as much as $30 million a day before things started picking up -- almost a third of the total that visitors spent on an average day last year. But resort operators won't release financial details. Tax receipts on gambling and merchandise won't be calculated for several weeks. 

What's known is that hotel occupancy for the city's 125,000 rooms dropped to 67 percent on the first weekend after the attacks, when it normally would have been 97 percent. Longtime residents say there was a noticeable absence of traffic on the streets. Visitors said they were able to walk into shows that are usually sold out weeks in advance. 

Hotels and casinos responded with massive layoffs. State unemployment claims have more than doubled -- prompting the Nevada Employment Security Division to hire 40 more workers just to process the paperwork. 

But state officials say they're encouraged by tourists such as Shirley Bryant, a retired schoolteacher from Virginia. 

Bryant, who tapped her feet and swayed as Wayne Newton sang a hoarse medley of Elvis Presley hits at the Stardust on Tuesday night, said she and her husband visit Las Vegas every year around this time. 

"I was not going to let them change my plans," said Bryant, referring to the hijackers. 

Nancy and Norman Sueyoshi were nervous about flying from their home in Hawaii last week. They came anyway. 

"The president said we should try to get back to a normal life. I guess we wanted to show our support," said Nancy Sueyoshi, taking a break from strolling the simulated city streets inside the New York-New York Hotel & Casino. 

Outside, near the casino's 150-foot replica of the Statue of Liberty, visitors have left small flags, flowers and notes of condolence for the World Trade Center victims. 

All told, more than 200 groups canceled meetings or conventions in Las Vegas last month, said Erika Brandvik of the Las Vegas Visitors and Convention Authority. But many events in October and November are still scheduled, including Comdex, the computer trade show set for next month. 

Meanwhile, tourism officials have aimed a new marketing campaign at vacationers from nearby states. Since the hijackers targeted long-distance flights on Sept. 11, marketers are hoping people will be less reluctant to make shorter trips. 

The campaign may be working: Las Vegas hotels were 97 percent booked last weekend -- which is normal for this time of year. Mid-week occupancy is still down -- a projected 78 percent this week, compared with 89 percent for this time last year. 

But hotels have cut their rates to fill those rooms. A spokeswoman for the plush Bellagio, for example, said rooms that rented for $259 the week before Sept. 11 were going for $129 this week. 

So even as occupancy increases, Brandvik said, revenues are "far below normal." 

The long-term effects are unclear. Some say it's only a matter of time before Las Vegas visitors are spending as much money as ever. 

"Americans have gotten to the point where they regard leisure as a right," said Hal Rothman, a historian at the University of Nevada-Las Vegas, who has studied the city's evolution and culture. 

The phenomenal growth rate in the Las Vegas area -- it gained 70,000 new inhabitants a year during the last decade -- has been fueled by the leisure industry. Most of the new residents are service workers or retirees, lured by the climate and the chance to buy a house for a median price of $170,000. 

Some of those workers who lined up for assistance this week said they had been earning $10 and $11 an hour as banquet servers and hotel maids. 

Wilbert Gates, 43, lost his job last month as a porter at the Castaways Hotel. He now works part-time unloading trucks, but that's not enough to support his wife and three children. 

"We just bought a house," he said, shaking his head. 

Gates said he hopes to get rehired, but he doesn't know when. "The way the war is going on, it may not be for a while." 

-----To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.sjmercury.com 

(c) 2001, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News. MGM, 


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