What Does This All Mean?

September 2011

by

Paul S. Felix

 

Normally, this feature is posted on or about the 21^st day of each quarter. This time it is late because I’ve upgraded to a whole new computer, word processor and spreadsheet and browser. Needless to say, there were great tribulations in the process of learning all the new equipment and applications. It also involved a major reconstruction of all the formatting I’ve been doing. I still haven’t learned how to re-create some of the bar graph charts in previous editions, so we’ll have to do without them for now.

 

Las Vegas, according to Business Insider at http://www.businessinsider.com/the-most-miserable-cities-in-america-2011-9, is the #1 most miserable city in America. Leading the nation in unemployment, and home value declines Sin City sees what it’s really like to be an almost exclusively service based city in very bad economic times. And nothing indicates it’s going to be getting better any time soon. Banks in Vegas, as elsewhere in the country, are keeping home market values from catering further than they already have by refusing to put all their foreclosed properties on the market at once. Depending on the city it seems to be varying from as little as 10% to a near peak of 40% of foreclosures are actually available for resale. If Business Insider thinks a home value decline of 64.5% in Las Vegas is bad, imagine what it would be like if all those foreclosed properties were available at once? Is this sound economic and business policy on the part of the lending institutions who brought you the derivatives markets and Quantitative Easing (QE) parts 1, 2 and now 3? Or is it just sleazy greed? I’ll let you decide for yourself.

 

As mentioned in the June edition, the closure of the Sahara would have “unbalanced” the look of the review, so I’ve removed two other properties to balance things out. Green Valley Ranch and Hard Rock are no longer included, primarily because neither one of them have had much in the way of reviews for some time now. To be a bit more precise, Hard Rock hasn’t had a single new review added in over 3 years, and GVR only 1. Since it’s an exercise in futility to track something that doesn’t change, they’re out of here. Hopefully the properties remaining will continue to provide enough grist for the mill to keep this column alive. Cross your fingers.

 

There were 15 new reviews this quarter on the 30 properties reviewed here.

 

Legend:

Big Winner

Big Loser

Most Average

Largest score change, up or down

 

RATE: How many visitors have they had this month? How popular are they? Average 81

The negative numbers depict which properties had corrected visitation due to repeat views, as mentioned.

	Winner					Average					Losers
1	Flamingo	158	1		11	Paris	89			21	Mandalay Bay	66
2	Luxor	142	2		12	Harrah's	86	1		22	Venetian	66
3	Orleans	134	1		13	TI	83			23	Circus Circus	62
4	Imperial Palace	125			14	Stratosphere	80	2		24	Wynn LV	62
5	Planet Hollywood	110	1		15	Tropicana	74			25	Riviera	52
6	MGM Grand	108	2		16	Bellagio	73	2		26	Caesars	50	1
7	Bally's	104			17	NYNY	73			27	Gold Coast	44
8	Golden Nugget	99			18	Rio	73			28	LV Hilton	37
9	Excalibur	94			19	Mirage	71			29	Four Queens	34
10	Monte Carlo	91			20	Fitzgerald's	67	1		30	Palms	31	1

The “eclectic” selection of properties that had more than one review seems to indicate (from an examination of some background info not shown here) that visitors to Vegas are trying desperately to find someplace that will continue to provide them with good things at good prices. Though visitation is way down because of a dissolving economy people are still going to LV in numbers large enough to make or break Nevada’s gambling industry. In better times the annual average tourists was ~42-million. 2010 showed slightly more than 36-million. Though the 2011 projections are looking better (a possible increase in actual tourism from 2010) average spending per visitor is still down enough to leave LV with a net revenue loss.

 

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OVERALL: Who’s the best of the best? Average = 7.08

	Winner					Average					Losers
1	Orleans	7.93	0.01		11	Wynn LV	7.33			21	TI	6.97
2	Mandalay Bay	7.71			12	NYNY	7.32			22	Tropicana	6.95
3	Mirage	7.60			13	Venetian	7.27			23	LV Hilton	6.82
4	MGM Grand	7.52	-0.01		14	Fitzgerald's	7.25	-0.03		24	Imperial Palace	6.81
5	Bellagio	7.43	-0.08		15	Gold Coast	7.22			25	Excalibur	6.78
6	Planet Hollywood	7.42	-0.01		16	Monte Carlo	7.18			26	Luxor	6.64	0.02
7	Paris	7.40			17	Rio	7.16			27	Palms	6.56	-0.01
8	Bally's	7.40			18	Harrah's	7.11	-0.02		28	Stratosphere	6.25	-0.06
9	Four Queens	7.39			19	Flamingo	7.07	-0.01		29	Riviera	5.92
10	Golden Nugget	7.38			20	Caesars	7.04			30	Circus Circus	5.54

There’s no real change in this category. As a composite of several individual categories below, change here is not frequent. Orleans remains the “best kept secret” in LV posting a hefty 2/10th’s of 1% lead over their next closes rival Mandalay Bay. To some that might not seem like much, but when a category average change runs regularly at about 2/100th’s of a percentage, that 2/10th’s becomes huge. To demonstrate that, Bellagio’s .08 decline did nothing for positioning. True, it set up a possibility that Planet Hollywood could end up in the #5 position, but that’s all.

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ROOM: Size, comfort, amenities, quality, etc.  Average=7.23

	Winner					Average					Losers
1	Mandalay Bay	8.74			11	TI	7.56			21	Fitzgerald's	6.74	-0.06
2	Venetian	8.43			12	Mirage	7.52			22	Flamingo	6.72
3	Wynn LV	8.41			13	Paris	7.49			23	Harrah's	6.65	-0.03
4	Orleans	8.25			14	NYNY	7.41			24	Four Queens	6.52
5	Bellagio	8.19	-0.07		15	LV Hilton	7.40			25	Excalibur	6.44
6	Rio	8.09			16	Bally's	7.21			26	Stratosphere	6.41	-0.06
7	Palms	7.93	-0.03		17	Caesars	7.14	0.04		27	Tropicana	6.20
8	Golden Nugget	7.81			18	Monte Carlo	7.06			28	Riviera	6.03
9	MGM Grand	7.70	0.01		19	Luxor	7.05	0.02		29	Circus Circus	5.90
10	Planet Hollywood	7.59	0.02		20	Gold Coast	6.88			30	Imperial Palace	5.48

Bellagio dipped below Orleans for best rooms. This isn’t too surprising as their price versus value for their rooms has not seen quite the same adjustment many other properties have. They have a big bottom line to fill at that place and perhaps can’t afford to drop prices as much as others can. Regardless, visitors were not happy and told us about it. As it is declines led increases by almost 3:1. The big pictures says customers are not happy.

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SERVICE: How were you treated? Average=7.01

	Winner					Average					Losers
1	Orleans	8.19	0.01		12	Venetian	7.33			23	LV Hilton	6.83
2	Mandalay Bay	8.00			13	Planet Hollywood	7.30			24	Harrah's	6.74	-0.03
3	Rio	7.76			14	Paris	7.28			25	Palms	6.70
4	Wynn LV	7.72			15	Fitzgerald's	7.07	0.01		26	Flamingo	6.68
5	MGM Grand	7.62	-0.02		16	Monte Carlo	7.07			27	Luxor	6.61	0.02
6	Mirage	7.57			17	Caesars	7.06			28	Excalibur	6.44
7	Golden Nugget	7.45			18	Bellagio	7.04	-0.08		29	Stratosphere	6.32	-0.06
8	NYNY	7.41			19	Bally's	6.90			30	Imperial Palace	6.16	0.01
9	Four Queens	7.38			20	Tropicana	6.86			31	Riviera	5.50
10	Gold Coast	7.34			21	TI	6.84			32	Circus Circus	5.22

As a “critical” category, this is one area a property must perform well in if they expect to get and keep not only a good bottom line, but the customer loyalty so important to making that happen.  Perception of “bad” treatment (apathy, rudeness, etc.) can destroy any business. In something so seminally non-essential as gambling, that perception and mean a death sentence in fairly short order. Minor moves (that that for MGM Grand or Harrah’s) occur regularly. After all, everyone has a different opinion and as those opinions are express the numbers will fluctuate. But something like Bellagio’s dip are not run-of-the-mill. They are a sign that something is wrong with the property’s fundamental direction. If it isn’t addressed and corrected soon, “word of mouth” could turn a single tumbling stone into an avalanche. Wake up Bellagio, reality is calling.

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CASINO: Atmosphere, selection, odds, comps, etc. Average=6.51

	Winner					Average					Losers
1	Orleans	7.62	0.02		11	LV Hilton	6.62			21	Palms	6.25	0.05
2	Mandalay Bay	7.45			12	Paris	6.56			22	Venetian	6.21
3	Wynn LV	7.24			13	Golden Nugget	6.55			23	Fitzgerald's	6.20	-0.10
4	Mirage	7.21			14	Caesars	6.46	-0.02		24	Stratosphere	6.18	-0.06
5	MGM Grand	7.15	-0.01		15	Monte Carlo	6.46			25	Imperial Palace	6.10
6	Four Queens	6.94			16	Luxor	6.41	0.01		26	Flamingo	6.08	-0.04
7	NYNY	6.93			17	Planet Hollywood	6.40			27	Excalibur	6.05
8	Bellagio	6.91	-0.07		18	Tropicana	6.37			28	TI	6.00
9	Gold Coast	6.70			19	Harrah's	6.27	-0.04		29	Riviera	5.92
10	Rio	6.64			20	Bally's	6.25			30	Circus Circus	5.22

“Critial” category #2 addresses the primary reason people come to Las Vegas; the gambling. Without an attractive casino, visitors will visit someone else. Bellagio still seems to have a problem, but not the worst one this quarter. Fitzgerald’s took a hard hit. Let it be noted, however, that that huge hit was as a result of a single new review, where Bellagio’s troubles are from two reviews. As a result the Fitzgerald’s dip is somewhat skewed; overly extreme and out of character. In other words, that one visitor was upset enough to rate them unnecessarily harshly.

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VALUE: Was it worth what you paid? Average=7.11

	Winner					Average					Losers
1	Orleans	8.82	0.01		11	MGM Grand	7.34			21	Luxor	6.87	0.01
2	Gold Coast	8.11			12	Planet Hollywood	7.31			22	Paris	6.84
3	Fitzgerald's	8.00			13	Monte Carlo	7.27			23	TI	6.61
4	Four Queens	7.97			14	Tropicana	7.27			24	Venetian	6.45
5	Bally's	7.58			15	Imperial Palace	7.19	0.01		25	Riviera	6.40
6	Mandalay Bay	7.50			16	NYNY	7.16			26	Palms	6.35	-0.08
7	Golden Nugget	7.47			17	Harrah's	7.11	-0.04		27	Circus Circus	6.33
8	Stratosphere	7.40	-0.06		18	LV Hilton	7.08			28	Wynn LV	6.19
9	Excalibur	7.35			19	Flamingo	7.00			29	Caesars	6.08	-0.06
10	Rio	7.35			20	Mirage	6.92			30	Bellagio	6.05	-0.11

“Critial” category #3 addresses customer satisfaction, at least on the “price point” angle. Again, Bellagio (already at the bottom of the list) gets hammered. The place is beautiful, but more and more customers are feeling “ripped off” by their prices. Compare the Bellagio’s dip to that of Stratosphere (keeping in mind the vast difference in “quality” of the properties) and one can only wonder how bad it really is. I suppose one could actually go there and pay those prices and see.  I’ll pass.

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LOCATION: Is it close to other attractions you want to experience? Average=7.53

	Winner					Average					Losers
1	Imperial Palace	9.13			11	Four Queens	8.14	0.02		21	Wynn LV	7.08	0.02
2	Bally's	9.06	-0.06		12	Tropicana	8.06			22	Mandalay Bay	6.87
3	Bellagio	8.98	0.02		13	Monte Carlo	8.04	0.03		23	Orleans	6.78	-0.05
4	Flamingo	8.88			14	Venetian	7.95			24	Luxor	6.25
5	Paris	8.85			15	TI	7.84			25	LV Hilton	6.18
6	Harrah's	8.80	-0.02		16	MGM Grand	7.78	-0.05		26	Rio	5.94	-0.06
7	Mirage	8.76			17	NYNY	7.68			27	Riviera	5.76
8	Planet Hollywood	8.50			18	Golden Nugget	7.63			28	Palms	5.58
9	Caesars	8.48			19	Excalibur	7.62			29	Circus Circus	5.04
10	Fitzgerald's	8.26			20	Gold Coast	7.09	0.01		30	Stratosphere	4.96

My usual issue with the questionable usefulness of this category aside, Bally’s and the IP have shared and swapped the #1 spot here off and on for the last 7 years (the length of time this review has existed). Currently it resides with IP. Who knows which one will hold it next quarter? Confused construction schedules, projected properties not seeing the light of day, older places getting imploded and a number of other factors not part of the long-term “usual” in LV have the issue back up in the air. Though I once senses a southward creeping I can no longer tell, at least by the use of just these numbers, where the “best” slot is likely to land next. We’ll have to see what the future holds together.

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FAMILY: Is the place “kid friendly”? Average=41.47% said, “Yes”.

	Winner					Average					Losers
1	Excalibur	83.00			11	Stratosphere	50.00			21	Caesars	26.00	-0.50
2	Circus Circus	82.30			12	Tropicana	50.00			22	Planet Hollywood	25.50	-0.20
3	Orleans	79.10	0.20		13	Mandalay Bay	48.50			23	Bellagio	24.70	-0.70
4	NYNY	68.50			14	Mirage	43.70			24	Golden Nugget	21.20
5	MGM Grand	66.70	-0.30		15	Venetian	42.40			25	TI	20.50
6	Luxor	58.50	0.60		16	Paris