What Does This All Mean?

December, 2009

by

Paul S. Felix

 

Unemployment numbers for September hit 13.3 % in Nevada as a whole and 13.9% in LV proper, declining and seeming to level out at about 13.0% for both by the end of October (The November numbers were not available at the time of this writing). That’s a new record high (in both numbers). Follow this link to see the actual figures from the Nevada Department of Numbers. Also see this Fox5News piece for more info.

 

I remember, from years ago, an economics instructor reminding the class of some basic facts to keep in mind when looking at this number: there are always a certain number of people out of work for a variety of reasons. That number has been officially set at 5%. Any time unemployment is at or less than that number, the workforce is considered “fully employed.” But, he also said, that 5% is not reflected in the number we are given on the nightly news. Since it’s always there, there’s no need to mention them, right? When the announced unemployment rate is, say, 4% they mean 4% above and beyond that perpetual 5% base. So, in reality that number should be read as 9%. And… here’s the kicker, there are others that neither that 4% number doesn’t include (because there’s no way to track them) nor is included in that 5% perpetual base– those who have been unemployed so long they are no longer qualified for unemployment benefits, and those who have stopped looking for work (not retirees or the disabled, just disgusted and/or disenfranchised people who have given up). That number is – at a minimum – the same as the 5% base, sometimes much larger. The harsher the economic times, and the longer those bad times last, the larger that additional number becomes. If we add a minimum of another 5% to that adjusted 9%, we now have 14% unemployment. So, how would we read the LV numbers in light of this “insider” revelation? Well, while LV was at 13.9% unemployment (as of October, 2009), if we add in the 5% base not included in the public numbers (it now becomes 18.9%), then add in at least another 5% to reflect those who have given up, that would put LV’s real unemployment rate at a minimum of 23.9%, or very, very close to one in every four people out of work. If that 5% “just given up” number is larger (because the harshness of the economic downturn is bad enough and the length of time it has lasted is long enough) then the 23.9% adjusted would increase consummately. That’s rather scary if you ask me.

 

An estimated 3-5 year delay in completion of Echelon doesn’t help things at all – (another Fox5News article about that here). Hooters will probably be going Tango Uniform soon. They filed bankruptcy early in on it doesn’t look like they’ll recover. Binion’s has announced it is closing most of its facility: the hotel, some restaurants, etc., -- essentially everything but the gambling. They’re trying to cut costs and maximize income as much as possible. To me, this is a sign that Binion’s is on the way out. I now officially put them on my “Death Watch” list along with Riviera and Circus, etc. Carl Icahn is trying to buy the Fontainebleau. Everywhere we turn there are unpleasant pictures on the economic front, and LV continues to suffer the consequences of being such a high-intensity service industry. Whenever economic difficulties occur, consumers quickly begin making tough choices about where to spend their hard earned money. Non-necessities are first to go, and let’s face it… despite our collective proclivities concerning our fandom for things LV, going there is not a necessity. Unnecessary travel is one of the first things to get axed in most people’s prioritization so LV is a prime target to get missed. As we travel and spend less, the casino properties make less and are forced to start making survival-level decisions of their own: trickle-down economics with a vengeance.

 

The charts below show quarterly totals, the final one giving the appearance a recovery might be starting. How true that could be won’t be seen for a while yet. Caution must be exercised. If we look at the older numbers already given in those same charts, we see more than one instance of a steady drop broken by an occasional climb followed immediately by another drop. So, don’t’ take this as more than a flash in the pan until more convincing evidence surfaces later.

 

 

Figure 1.

Figure 2.

 

The fourth quarter was, by far, the biggest one of the year; something approaching 2008 numbers, but the total for 2009 was still only a little more than half that from 2008, just about 1/3^rd of the 2007 numbers, and less than 1/5^th of the 2006 numbers. Ouch…

 

All that said, this quarter 31 new reviews and ratings were received on the 33 properties examined.

 

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 74

	Winner					Average					Losers
1	Flamingo	153	4		12	TI	82			23	Fitzgerald's	61	1
2	Luxor	131	2		13	Harrah's	78	3		24	Circus Circus	59
3	Orleans	124	1		14	Stratosphere	75	1		25	Sahara	59	1
4	Imperial Palace	121	2		15	Tropicana	74			26	Riviera	49
5	Planet Hollywood	108	1		16	Bellagio	69			27	Caesars	48
6	MGM Grand	101	2		17	NYNY	69	1		28	Gold Coast	43
7	Bally's	99	2		18	Rio	68	1		29	LV Hilton	37
8	Golden Nugget	98	1		19	Mirage	67	2		30	Four Queens	34
9	Excalibur	93	2		20	Mandalay Bay	64	2		31	Palms	29
10	Monte Carlo	90	1		21	Venetian	63	1		32	G.V.R.	21
11	Paris	86			22	Wynn LV	62			33	Hard Rock	17

 

WINNERS: In typical style the winners continue to win while the losers continue to suffer under the weight of their own faults. Flamingo topped the charts bagging four new ratings to further extend their head-and-shoulders lead above everyone else as the most popular place in town, overall. MGM Grand finally broke the 100 review mark. Congratulations.

 

AVERAGE: Last quarter the Trop and Strat were tied for most average. Strat picked up one leaving Trop alone in the pool. Strange that such an old property is more popular than Bellagio or NYNY, two newer, cleaner, more hip places. Guess the old saying, “Youth and enthusiasm cannot compete with age and experience,” has some validity after all?

 

LOSERS: Ever game, Fitz’s still hovers on the edge of mediocrity, still one review short of matching Wynn for popularity (or lack thereof). A note here: Hard Rock still hasn’t gained a new review. In fact they haven’t had one since about March of 2008. Given their lack of activity, I am on the verge of eliminating them from the list. In the past I’ve eliminated other non-performing properties (Main Street Station for one), and see little reason to keep these guys on board. Their performance is so dismal in so many areas it’s difficult to justify continuing to watch their non-activity – kind of like watching paint peel… What property I might replace them with is the big issue, though. I’ve just about winnowed the broad list (of every property in or near the city) down to just the nub listed here. One could hardly call this a “cream of the crop” selection, but it does represent the most active and well-known/recognized places LV has to offer. I’ll just have to keep hunting. Maybe some of the new kids coming on line will provide some grist.

 

*   *   *   *   *   *   *

 

OVERALL: Who’s the best of the best? Average = 6.99

	Winner					Average					Losers
1	Orleans	7.93	0.02		12	Gold Coast	7.34			23	Luxor	6.88	-0.02
2	Mandalay Bay	7.77	0.12		13	Fitzgerald's	7.26	0.02		24	LV Hilton	6.82
3	MGM Grand	7.63			14	Golden Nugget	7.26	0.03		25	Imperial Palace	6.81	-0.02
4	Mirage	7.61	0.02		15	Rio	7.18	0.02		26	Excalibur	6.62	0.07
5	Bellagio	7.59			16	Monte Carlo	7.15	0.01		27	Palms	6.51
6	Bally's	7.50	-0.01		17	Harrah's	7.14	-0.04		28	Stratosphere	6.36	-0.02
7	Wynn LV	7.46			18	Venetian	7.11	-0.07		29	G.V.R.	6.29
8	NYNY	7.46	0.02		19	Flamingo	7.04	0.04		30	Sahara	6.11	-0.07
9	Planet Hollywood	7.42	-0.01		20	TI	7.02			31	Riviera	5.79
10	Paris	7.40			21	Caesars	7.00			32	Circus Circus	5.60
11	Four Queens	7.39			22	Tropicana	6.95			33	Hard Rock	5.28

 

WINNERS: Mandalay Bay’s performance here is just the first of a series of sweeping increases this quarter. They had two new reviews and considering how well they’re already rated, I cannot justify labeling these new numbers skewed. That means they’ve done something really positive over the last three months. Look below for category specifics. Increases outnumbered declines by 10 to 8, which is supposed to be good. The total point shift is .37 upwards and .26 downwards for a total of a .11 gain. In other words, Mandalay’s shift up is about the sum total of the difference between a balanced chart. Otherwise, there would have been no real effective change.

                                        

AVERAGE: Minor shifts occurred, but there is nothing substantive to note.

 

LOSERS: Likewise, nothing noteworthy here, either.

 

*   *   *   *   *   *   *

 

ROOM: Size, comfort, amenities, quality, etc.  Average=7.18

	Winner					Average					Losers
1	Mandalay Bay	8.81	0.12		12	Planet Hollywood	7.59	-0.02		23	Flamingo	6.68	0.02
2	Wynn LV	8.54			13	Mirage	7.52	0.02		24	Harrah's	6.66	-0.08
3	Orleans	8.31	0.01		14	Paris	7.47			25	Four Queens	6.52
4	Bellagio	8.30			15	LV Hilton	7.40			26	Stratosphere	6.44	0.01
5	Venetian	8.26	-0.11		16	Luxor	7.35	-0.02		27	Hard Rock	6.35
6	Rio	8.14			17	Bally's	7.32	0.01		28	Excalibur	6.29	0.05
7	Palms	7.89			18	G.V.R.	7.28			29	Tropicana	6.20
8	MGM Grand	7.79	0.01		19	Caesars	7.06			30	Circus Circus	5.94
9	Golden Nugget	7.67	0.02		20	Monte Carlo	7.03	0.01		31	Riviera	5.87
10	TI	7.60			21	Gold Coast	7.02			32	Sahara	5.86	-0.08
11	NYNY	7.59	0.01		22	Fitzgerald's	6.78			33	Imperial Palace	5.50	-0.02

 

WINNERS: Venetian dropped below Bellagio. In a rather mirror image to Mandalay, Venetian’s performance seem system wide. See below for details. Room prices in the top 5 is still of interest this quarter. Orleans is the only one with “affordable” rooms, in light of the economic pinch everyone is feeling. As with last quarter, the tourist camp still seems broken into the two camps of those that have enough money to not care about bad financial times and those who are down-scaling their digs to something much more affordable. The quality of the rooms are good, but look above at Rate (popularity) and below at Value (cost) to see where the core of LV visitors are really spending their hard earned cash.

 

AVERAGE: No real changes here. Though PH dipped slightly, and alphabetization puts them below NYNY, they’re still a good selection for quality rooms.

                                                                                            

LOSERS: Flamingo recovered some of last quarter’s big decline, but it was Harrah’s beating that puts them back on the threshold to Average. Their rooms are below par, but they’re generally affordable and being Center Strip as they are, the rooms that overlook the Strip give a great view for the money.  Half of the four properties below the Trop are still on the verge of closure as it is (Circus and Riviera) and IP is still rumored on the road to mothball by HET for economic reasons. Sahara dropped two places, which has to really hurt. They’re now rated not only inferior to Circus – their one time closest rival – but now they’re even worse than Riviera by a small amount. They had only one review. Someone was really unhappy… Unfortunately for Sahara, I can’t count the review skewed, the property simply failed.

 

*   *   *   *   *   *   *

 

SERVICE: How were you treated? Average=6.92

	Winner					Average					Losers
1	Orleans	8.19	0.02		12	Planet Hollywood	7.28	-0.03		23	LV Hilton	6.83
2	Mandalay Bay	8.06	0.18		13	Paris	7.27			24	Flamingo	6.63	0.03
3	Wynn LV	7.90			14	Venetian	7.14	-0.08		25	Palms	6.58
4	Rio	7.79	0.03		15	Monte Carlo	7.05	0.01		26	Stratosphere	6.49	-0.05
5	MGM Grand	7.73	-0.06		16	Fitzgerald's	7.04	0.03		27	Excalibur	6.30	0.09
6	Mirage	7.56	0.03		17	Caesars	7.02			28	Imperial Palace	6.16	-0.04
7	NYNY	7.53	0.03		18	Bally's	6.95	-0.03		29	G.V.R.	6.09
8	Gold Coast	7.48			19	TI	6.90			30	Sahara	5.84	-0.07
9	Four Queens	7.38			20	Luxor	6.87	-0.01		31	Hard Rock	5.47
10	Golden Nugget	7.31	0.02		21	Tropicana	6.86			32	Riviera	5.46
11	Bellagio	7.28			22	Harrah's	6.83	-0.10		33	Circus Circus	5.25

 

WINNERS: Mandalay, as part of their quarterly surge, finally broke the 8-rate mark, once held exclusively by Orleans. Whether they can stay there is the next story yet to be told. If they perform again like this last quarter they could theoretically take the lead, but I doubt they will. Their history doesn’t support the notion. On a Value for Price measure, Mandalay just can’t beat Orleans’ record. MGM’s drop here puts them below Rio, but still in the top 5. Their large selection, despite price, somehow makes them a draw.

 

AVERAGE: PH fell from #10 last quarter to high-Average at year’s end. I guess the hip crowds they target just don’t get it. Harrah’s dropped from the mid-Average line to the bottom of the average barrel. With three reviews, there’s no doubt they made a lot of people unhappy. The blue color of the category title, remember, indicates I consider this category one of the critical performance areas in which a property must perform well to continue rating well. Harrah’s screwed up somehow and are suffering as a consequence. Bad economic times or not, one does not treat ones customers badly and stay in business long. One would think that the owners would have figured that out by now and take pains to avoid that pitfall during trying times, but it seems they’re still in the dark.

 

LOSERS: Excalibur and IP swapped places again…and it still doesn’t register as an event. Circus and Riviera continue to rate below a property that hasn’t had any reviews in seven straight quarters. OMFG! That’s bad, bad, bad. How do these places stay in business with piss-poor performance like that?

 

*   *   *   *   *   *   *

 

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

	Winner					Average					Losers
1	Orleans	7.58	0.02		12	LV Hilton	6.62			23	Fitzgerald's	6.27	0.04
2	Mandalay Bay	7.51	0.11		13	Luxor	6.59			24	Sahara	6.23	-0.02
3	Wynn LV	7.43			14	Paris	6.59			25	Venetian	6.14
4	MGM Grand	7.30	0.02		15	Golden Nugget	6.46	0.03		26	Palms	6.13
5	Mirage	7.25	0.01		16	Caesars	6.43			27	Flamingo	6.09	0.05
6	NYNY	7.07	0.03		17	Monte Carlo	6.42	0.03		28	Imperial Palace	6.05	-0.01
7	Bellagio	6.98			18	Bally's	6.38	-0.01		29	TI	6.04
8	Four Queens	6.94			19	Planet Hollywood	6.38			30	Excalibur	5.89	0.07
9	Gold Coast	6.76			20	Tropicana	6.37			31	Hard Rock	5.88
10	G.V.R.	6.71			21	Stratosphere	6.32			32	Riviera	5.77
11	Rio	6.63	0.05		22	Harrah's	6.29	-0.07		33	Circus Circus	5.30

 

WINNERS: Mandalay posts another challenge to Orleans, but again I say their history doesn’t support a sustained enough effort to take and then keep a lead. The general lack of activity in most of the rest of the column just shows that most visitors pretty much agree with their previous fellows’ opinions about who’s got the best gambling floors in town.

 

AVERAGE: Most of the places in this column are below average and seem satisfied to stay there. This is another blue label category, critical to a property’s future. I guess it shows that even a mundane gambling environment will attract customers enough to support some sort of business.

 

LOSERS: A slow climb by Venetian finally comes to a halt. They’re stymied and stuck. Picture if you will, the beautiful physical motif of the property being relegated by their actual customers as less enticing than Sahara, a place we’ve already seen (above) with less appetizing rooms than Riviera, lower quality service than Imperial Palace and an overall popularity lower than Circus…and we’re to somehow believe that Venetian is a great place to gamble? Adelson needs to get is head out and get some things straightened out or he’s going to lose that place… which would be a crying shame, because Venetian has become an icon of LV themed properties. It’s big. It’s beautiful; it’s just not a nice place to go for anything other than sightseeing. Excalibur climbed over the comatose Hard Rock.  Whoopee do. Beating a corpse in a race just doesn’t strike me as special. I won’t even mention Riviera and Circus…

 

*   *   *   *   *   *   *

 

VALUE: Was it worth what you paid? Average=7.02

	Winner					Average					Losers
1	Orleans	8.87	0.01		12	NYNY	7.28	0.02		23	Paris	6.80
2	Gold Coast	8.27			13	Tropicana	7.27			24	TI	6.68
3	Fitzgerald's	7.98	0.02		14	Monte Carlo	7.23	0.01		25	Circus Circus	6.42
4	Four Queens	7.97			15	Imperial Palace	7.19	-0.02		26	Palms	6.37
5	Bally's	7.66	-0.01		16	Excalibur	7.18	0.06		27	Bellagio	6.31
6	Mandalay Bay	7.56	0.16		17	Luxor	7.13	-0.03		28	Riviera	6.30
7	Stratosphere	7.48	-0.03		18	Harrah's	7.12	0.04		29	Wynn LV	6.30
8	MGM Grand	7.41	0.01		19	LV Hilton	7.08			30	Venetian	6.20	-0.07
9	Golden Nugget	7.35	0.03		20	Flamingo	6.96	0.06		31	Caesars	6.10
10	Rio	7.35	0.01		21	Mirage	6.95	0.03		32	G.V.R.	6.00
11	Planet Hollywood	7.30			22	Sahara	6.94	-0.07		33	Hard Rock	4.76

 

WINNERS: Orleans showed another increase in “bang for the buck” during economic times like this. It was difficult to imagine last quarter. It’s beyond belief this quarter. Obviously the place is doing something right. Mandalay is now on the edge of top-5 stardom. But again I counsel caution. Their track record doesn’t support the idea of continued performance at this level, especially in yet another blue label (critical) category.

 

AVERAGE: Excalibur continued last quarter’s rise above the mid-line. More and more people are taking their value (comparatively low prices for almost everything) more seriously. Hints that Excal might have financial troubles seem to be fading as their performance values continue to brighten. As long as they don’t try gouging people, they ought to be alright, at least for the next two or three quarters. Beyond that, it’s impossible to extrapolate. Flamingo recovered from some of last quarter’s decline, but remains below the average line. They might have some things going for them, but general cost doesn’t seem to be one of them.

 

LOSERS: I’m not going to say a thing…

 

*   *   *   *   *   *   *

 

LOCATION: Is it close to other attractions you want to experience? Average=7.31

	Winner					Average					Losers
1	Bally's	9.20			12	Tropicana	8.06			23	Orleans	6.72	0.03
2	Imperial Palace	9.16	0.01		13	Monte Carlo	8.03	0.01		24	Luxor	6.45	-0.04
3	Bellagio	9.07			14	MGM Grand	7.93	0.04		25	LV Hilton	6.18
4	Paris	8.87			15	TI	7.86			26	Rio	5.98	0.01
5	Flamingo	8.86	0.03		16	NYNY	7.82	0.02		27	Sahara	5.66	-0.09
6	Harrah's	8.79	-0.01		17	Venetian	7.80	-0.08		28	Palms	5.58
7	Mirage	8.77	0.01		18	Golden Nugget	7.50	0.03		29	Riviera	5.55
8	Planet Hollywood	8.53	0.01		19	Excalibur	7.44	0.06		30	G.V.R.	5.38
9	Caesars	8.41			20	Gold Coast	7.16			31	Circus Circus	5.08
10	Fitzgerald's	8.24	0.03		21	Wynn LV	7.14			32	Stratosphere	5.05	-0.04
11	Four Queens	8.14			22	Mandalay Bay	6.90	0.05		33	Hard Rock	3.94

 

The southward creep for Top Dog Award for best Location continues to creep southwards. Though Paris is still mathematically the most likely candidate, I’m beginning to see a possibility that that might not be far enough south. If the current trend numbers continue unabated, then PH might end up inheriting the mantle. Granted that could still be two or three years down the line, but it’s a vague possibility. As previously noted, this may only be a phenomenon based on economic necessity. When financial pressures ease and people are able to afford “better” again, this seeming shift might well evaporate. If some of the players go under for good the remaining apple cart might look rather different. Suppose, say, Riviera, Circus and Venetian all die. How far would that push the southward lean? There would certainly be very little north Strip attraction and the new “center Strip” might become PH/Monte Carlo. That could easily make MGM/NYNY the best location. I’m not making this any sort of serious prediction, mind. I’m just ruminating on some extreme “what ifs”. I’m sure that however it ends up will be interesting.

 

*   *   *   *   *   *   *

 

FAMILY: Is the place “kid friendly”? Average=41.21% said, “Yes”.

	Winner					Average					Losers
1	Excalibur	84.90	0.30		12	Mandalay Bay	50.00			23	Riviera	26.50
2	Circus Circus	81.04			13	Tropicana	50.00			24	Bellagio	26.10
3	Orleans	79.80	-0.70		14	G.V.R.	47.60