I tell myself to dig deeper to find the good about our Las Vegas future, as what I see and read in local and national news is not always accurate in my opinion. I try to put it all together so it will make sense to our readers. The good news is buried in the not so good daily news. The fruit is in the seed.
Las Vegas Hotel Development
For instance there is bad press about the number of hotel rooms that we built in the last 5 years. Even Steve Wynn, Las Vegas Casino Visionary, wonders ‘What were the casino developers thinking?’ Wynn went so far as to call them ‘dim wits’.
The fact of the matter is that they overbuilt hotel rooms, unemployment is over 13%, and Nevada is the number one foreclosure market in the country. This is true. Let’s look at the picture from a different angle.
Tourism is Trending Up
If you look at a chart of the last 20 years of the tourists visiting Las Vegas, it trends upward. There are now 109,000 new visitors here every day. Retail and restaurants get a chance at 109,000 new customers every day, which is great for our local economy.
Although 2008 and 2009 the tourists and conventioneers numbers were down a bit but many still came but did not gamble as much or spend as much money shopping in our beautiful forums of shops and restaurants. Revenues dipped accordingly.
The hotels responded by offering rooms for bargain basement prices. So much so that their bottom lines turned red and some even faced bankruptcy as they were so highly leveraged. The anticipated spending did not occur. This is one of the facts that Steve Wynn was referring to as well. So far this year, 2010, the gaming revenues are up 1% and visitor volume is up 2.5%. Sparkles are starting to appear on our horizon!
State of Nevada Unemployment
The state of Nevada has over 140,000 individuals out of work. This number includes 80,000 high paying construction jobs. Yes, Clark County lost 53,000 jobs in 3.5 years, largely due to the tumbling housing construction market, the lack of consumer confidence in the USA, and the visitors spending less money in the Las Vegas casino industry.
In comparison, look at 2001 when the terrorists attacks occurred. Las Vegas lost 20,000 jobs due to the lack of tourists and spending. Within 2 years, the number of jobs increased from 717,631 to 762,172. 45,000 jobs In 24 months were created. From 1990 to 2010 the number of jobs more than doubled.
Las Vegas Competitive Advantage
Las Vegas has recovered quickly in the past. And now our competitive advantage is increasing! Nevada is number 5 for doing US business. Chief Executive magazine just reported that Nevada moved up from the 6th place last year to the 5th place for this year. We have Human Resources, Physical Space and our Homes, Industrial space, Commercial and Office space are at record low prices.
From an employee standpoint, the cost of living is much lower in Las Vegas. Nevada is a hunting ground for California which is the worst place to do business. Nevada just rolled out a $1 million advertising campaign in Southern California which highlights Nevada’s lower cost of doing business.
Perspective on Recent News
We see the good news – we don’t have to build and get into debt to handle the eventual increase in tourism and eventual spending. As tourism and spending go up, we just have to hire workers. Employment will go up without the debt going up.
The stock market is renewing its confidence in Las Vegas as Paulson & Co on Wall Street is investing One Billion Dollars in 3 Las Vegas Casino stocks. Paulson & Co is one of the largest hedge funds. He purchased 40 Million shares in MGM and 4 Million shares in Boyd Gaming, becoming the largest shareholder in each. Paulson also invested in Harrah’s stock for a 9.9% interest.
The real estate investors are here and buying homes below market value with cash and receiving as much as 10% to 15% return on their investments. This generates cash into our economy.
And the cash buyers will eliminate future foreclosures. 40% to 47% of the homes being bought are with cash. And the displaced home owners are renting those homes at much lower prices then they were paying for their mortgage. That is more cash for our economy.
First time home buyers can afford to buy a home now as mortgage rates are as low as 4.75% and home prices are truly affordable. A person or couple making $33,000 a year can put $5000 (3.5%) down on a home priced at $125,000 with 1500 to 1700 square feet.
The mortgage payment (Principal and Interest) will be under $700 and they get a tax break on the interest every year. Home owners put cash into the economy.
