Playing Call of Duty and watching the Can-Can while Rome burns

ImageTom Donoghue – iCandy Burlesque debuts at the Tropicana Las Vegas over the Thanksgiving 2011 weekend.

It is no secret that Nevada is on the bottom of the economic recovery list;  unemployment, foreclosures rates and housing sales Nevada are the worse state in the nation.  For a good part of the last 60 years, Nevada lead the country in all of the categories, construction, housing, unemployment and real estate in general.  The state bird was said to be the crane – the Las Vegas skyline was always filled with cranes erecting the latest mega project – and with a gaming economy that was constantly expanding, Nevada’s population continued to grow right up to the 2007 pinnacle. In 1950 Nevada had 160,000 residents, in 2007, there were more than 3,000,000.  As fast as people moved to the state, houses, schools, retail stores and, of course, casinos were built to provide for their needs.  Gaming and construction were the twin drums of the state’s economy.

With the kind of growth that Nevada experienced it should not come as a surprise that Nevada is really struggling in this economic crisis.  Now as people leave the state, houses, schools, retail centers and, of course, casinos stand empty waiting for a return to the boom times – something that may not happen for a very long time.  In fact, the state is not likely to ever reach the level of gaming revenue it once experienced – the Las Vegas Strip is the only gaming location that has a chance of returning to its glory days and its challenges are different from those of all other communities in the state.   With that clearly in mind, the state and local governments are industriously searching for other industries that might drive the economy. No miracle cures have surfaced to-date.

Reno, Lake Tahoe, Laughlin, Carson City and downtown Las Vegas all need something to replace gaming revenues that have been lost, not to the economic downturn, but the casinos in neighboring states. The Strip, is unique in all of the world and its fate will be different than the rest of Nevada.  But what exactly that means, I don’t know.  The Strip is struggling to find a way to manage until things get better; restructuring debt, cancelling projects, cutting expenses, lowering room rates and offering other bargains.  Caesars alone among the major players has announced projects in the hundreds of millions of dollars for the near future.  Meanwhile, several other major operators have faced bankruptcy and several have had their lenders assume majority control of the property.  Projects that did not manage to get finished stand waiting for a miracle and others that did not get past the drawing board are just empty lots, often saddled with huge debts.

The old Frontier site, purchased in 2007 for $1.4 billion may go back to its former owners by default, the purchaser wrote down $500 million of investment this quarter – but sees no chance of recovering anything in the future.  MGM is desperately trying to tear down its unfinished Harmon tower.  MGM claims it is unsafe, the builder says MGM doesn’t need or want any additional hotel rooms and doesn’t want to pay anything more on the CityCenter project.  The courts may ultimately need to decide the fate of many of those “un-done” projects.

As the big-time projects struggle with debt, excess capacity and the other challenges the current economy posses, the smaller operators are experimenting with unique attractions – hoping to find the magic formula that will fill their properties with customers.   The Tropicana is trying eye candy – iCandy – a burlesque show, including a special six table pit where the dancers do everything, deal cards, serve drinks and dance.

Hooters, has not necessary given up with breasts and flesh as ideal marketing devices, but it is looking for something more.  Hooters is introducing a video game parlor where “gamers” can play all of the latest video games with “gamer girls” to deliver game side service.  A video game parlor opened on the Strip earlier this year and is apparently successful – leading the breast company to conclude healthy young men want more than healthy young women – they want to game.  But wait, the bankruptcy court said there is not point in wasting any more time or money on this failed operations – Hooters is to be sold at auction by February 2012.  So if you want to game young man, you had better hurry before the gamer girls and Call of Duty fall beneath the auctioneers gavel.


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