Luxury for less than $100 as Las Vegas is hit by downturn

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This was published 15 years ago

Luxury for less than $100 as Las Vegas is hit by downturn

The Mirage Hotel and Casino in Vegas is one of the top hotels offering major discounts.

The Mirage Hotel and Casino in Vegas is one of the top hotels offering major discounts.

It's a city known for excess and tacky opulence, but as the global economic crisis hits, cashed-up tourists are staying away from Las Vegas.

For those still willing to head to the city of neon lights, there are bargains to be had. Five-star hotels are selling rooms for less than US$100 a night in an effort to stem the slump in demand.

Mirage Hotel and Casino, with its enormous fake volcano, was offering rooms for as little as US$80.

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Until recently, Las Vegas hosted 39 million annual visitors in almost 140,000 hotel rooms, with 10 new schools opened each year. It was a place that not only believed its own hype, but depended on it.

It has been a shock as everything has changed.

Like many US cities, Las Vegas is watching its economy reel. Home values have plummeted. Foreclosures have exploded. Unemployment is the highest it's been in at least 20 years.

For the first time in decades, the population has stopped growing. Casino projects are on hold.

Planes full of free-spending tourists are landing with less frequency. Long the embodiment of American confidence, the city is now in limbo.

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In Las Vegas, the economic mess is also an identity crisis.

"Jackpot Town!" the headline read.

And above it was the smiling face of Jesse Grice. He was just 27, six years into his career as an Elvis impersonator. A young Elvis Presley. A fit, fresh, gold lame Elvis, on the cover of Time Magazine.

As he tells it now, even then in November 1998, he could not believe his luck. He'd loved this town since he was a teenager in Dallas, when his father, a salesman, sold enough Tropicana orange juice to win a trip to Sin City, then returned with tales of the fantasy land in the desert.

By the time Grice arrived in 1993, the fantasy had grown larger. The Mirage - gambling tycoon Steve Wynn's new beacon of luxury - had changed the definition of casino.

The era of attractions, of pyramids and tigers and pirates and mini-European cites, had begun.

And yet, Grice was stunned to find the Elvis market untapped.

"I thought I was in heaven, man," he says in a voice that echoes The King's every inflection, only an octave higher.

"Fifteen years ago, if you was going to struggle, this was the town to struggle in."

Grice became a character like the city itself. He held nothing back. He was hungry. He made friends easily and promoted himself with charm. He made lots of money, fast, calling himself Jesse Garon, the name of Elvis' stillborn twin brother.

In 1996, Grice bought a Graceland - a 372 square metre rambling ranch with a squat palm tree out front and a kidney bean-shaped pool in back. He paid an ironworker to recreate the gates of Elvis' Memphis mansion.

"Las Vegas was beyond good to me," he says.

After years of seeing his home's value soar, Grice took a gamble, using equity in his house to invest in a downtown bar, hoping for long-term security.

But the gates of Graceland couldn't keep out a developing national recession.

As the bar's business slowed and he started to fall behind on mortgage payments, his Graceland began losing value.

The bank took it back in October. Grice sold his collection of memorabilia on the front lawn. He put the Graceland gates in storage and moved away.

Now, in a city that's also changed, an older, rounder, jumpsuit-era Elvis sips a midday martini in his condominium.

He's upbeat about living more simply, his new beginning, a new wedding chapel venture.

Still, he now says of the second-chance capital: "I think it's become an unforgiving town. I feel sorry for the fool who comes here to try to make it as an Elvis impersonator or anything else. It's just a tough town all round."

Las Vegas has seen huge expansion is recent years.

Mega-developer Steve Wynn threw down the gauntlet when he opened his sleek $US2.7 billion ($A3.79 billion) Wynn Las Vegas in 2005.

It spurred a new wave of one-upmanship, a key impulse in the Las Vegas identity. MGM Mirage Inc. announced its $US9.2 billion ($A12.92 billion) CityCentre project and billed it as the largest private construction project ever.

Las Vegas Sands, owner of the Venetian, spent $US1.9 billion ($A2.67 billion) on its Palazzo. Donald Trump built a taller condominium tower. Wynn built another hotel. The Cosmopolitan, the Fontainebleau, the Plaza, the billion-dollar projects could easily blur together.

One monster project became a victim of the credit crunch.

It was to be Boyd Gaming's Echelon project. It promised 5,000 rooms in six hotels in a complex that would be lush with landscaping and luxury accommodations. All for a mere $US4.8 billion ($A6.74 billion).

In August 2008 the company announced it was suspending the project. By October it announced plans would be delayed to the end of 2009.

The project may be downsized or built in phases, the Las Vegas Sun newspaper reported.

Michael Green, a history professor at the College of Southern Nevada and a longtime resident, says Las Vegas has never been like this.

Previous economic dips, one in the late 1990s and another after the attacks on September 11, 2001, were brief and largely confined to the tourism industry.

In a very Las Vegas way, they were forgotten once the money began flowing again.

This downturn already is longer and more pervasive, and it appears open-ended.

"This recession destroys the illusion of prosperity," Green says. "And I believe some of our prosperity was an illusion."

He describes Las Vegas' promise as an inversion of New York City's boast: "If you couldn't make it anywhere, you can make it here."

But it has long fallen short on that deal for many.

Southern Nevada social services have struggled to keep pace with need. The state's suicide rate is twice the national rate. The city leads the country in percentage of teenage high school dropouts. It's among the highest in percentage of medical uninsured.

This recession is laying bare these shortcomings, Green said. There's no easy money to hide the gaps, no certainty how long the downturn will last, no clear idea what the new Las Vegas will look like.

There are plenty of men and women trying to revive the enterprise.

They include a handful of casino executives who spent the past decade consolidating and expanding their reach to Macau, Bahamas, Singapore but have recently been stopped cold by the economic freeze.

They are a small group of public officials who for years worked to enable growth in the desert, acquire the water needed to sustain it and green-light the developments that created jobs and profits. Today they figure out what budgets to cut.

And there are the guardians of Las Vegas' image, the ad execs tasked with making sure tourists still want to come here.

Among those is Terry Jicinsky, the senior vice president of marketing for the Las Vegas Convention and Visitors Authority, which has a budget of nearly $US220 million ($A308.9 million), funded by room taxes, and operates the nation's third largest convention centre.

The authority developed the "What happens here, stays here" ad campaign.

But as smaller numbers of visitors come - off 10 per cent in October, from a year earlier - the marketers keep adjusting their pitch: casting Las Vegas as an easy last-minute destination, then as affordable, then as an escape for "crazy times".

But bad times? No one here planned for that.

"Because our growth cycle has been going on for 20 years, you know, for many people, myself included, that's a career. That is the entire length of your experience," Jicinsky says from his office above the convention centre floor.

"We have casino executives that started working in their 20s and 30s that are now in their 40s and 50s, where all they knew was double-digit growth year after year after year."

As Jicinsky speaks, the bustle of the convention floor floats into his office. Today's convention, a gambling industry summit, has been full of glum news of suddenly frugal gamblers and tightfisted lenders.

AP

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