Building Hotels-Casinos after the Great Recession

‘Space hotel’ plan unveiled in Russia

View out of the International Space Station, over the Caspian Sea
Hotel guests would view the Earth ‘through large portholes’, the company said

Here is my quick summary of the state of gaming as September and the third quarter of 2010 end; there is a lot of competition and it is increasing, to make matters worse we are still in a depressed economy.   A new trend is surfacing that suggest that we are entering into a brand new era for casino gaming – one that will mean when the recession has ended the building may start somewhere other than the Las Vegas Strip.

MGM is going to sell off some of its assets, go to the public market and move in an even more pronounced way toward Asia with hotels all around the region.  That means MGM, Sands and Wynn will have all taken significant steps toward becoming Asian companies; there are constant rumors that Harrah’s will follow, but so far it has not secured a beachhead.

With MGM joining the group it is clear than the center of gravity of the gaming world is moving away from Las Vegas; and that makes this era different from all of the preceding ones for gaming.  In the past when Las Vegas seemed a bit overbuilt, as it seemed when Mirage, MGM Grand or New York New York opened or when tourism slowed down, as it did after 9-11, patient observers all said: “Vegas will be back, Las Vegas always comes back.” And come back it always has; Las Vegas was the center of the gaming world and only needed a little time to rest up, absorb the new product and wait for the economy to recover.  When it did recover the building started again in Vegas, a phenomenon that made it the fastest growing city in the country for much of the last couple of decades.   That is not the situation today, the center of gravity has moved away to Macau and Singapore –  when things do get better the major gaming companies are going to increase their investment in Asia first, doing the same math to calculate return on investment – that process has always favored Las Vegas.  Gaming company asked one simple question: “where will we get the best return for our investment.”  That question kept dollars flowing to Las Vegas for 40 years and now it will send them to Asia – which for Las Vegas will be a lot like building hotels in outer space.


4 Responses to “Building Hotels-Casinos after the Great Recession”

  1. 1 Rita P Best October 2, 2010 at 1:57 pm

    WOW! A sad inditement of our history and governing systems. Money; its what makes the world go round…

  2. 2 Michel Casinova October 7, 2010 at 10:10 pm

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Keep blogging.

    • 3 ken adams October 8, 2010 at 9:59 pm

      Thanks for taking the time to comment; I am on vacation this week and not posting, but the rest of the time I try to post 5 or 6 times a week. The main topic is casino gaming, however I use other disciplines to provide perspective or context to a major gaming story or trend – in particular I have been using evolutionary theory to frame the current economy and the changes that casinos – and most industries – are undergoing. ken

  3. 4 Jhon Mathew October 10, 2010 at 9:36 pm

    It is important to point out that the honest games providers also pay out the most winnings to players. They can afford to pay more because they’re driven by profit. Online casinos can well afford to pay their players whenever they win because there’s still plenty of profit to be earned by the operator.

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