Las Vegas Lodging Lessens Reliance On Gaming Industry
Starwood Hotels & Resorts Worldwide last month announced it was returning to the high visibility Las Vegas market with an 825-room Westin hotel, scheduled to open this fall just off the Las Vegas Strip. The announcement closely follows the February opening of the 349-room Ritz-Carlton Lake Las Vegas located in nearby Henderson, Nev. Together, the two projects are evidence that Las Vegas has established itself as an upper upscale and deluxe destination separate and apart from any reliance on the gaming industry. Rather, the city and suburbs have become a destination for high-end corporate meetings and transient business travel, as well as drawing on the traditional leisure base.
The pioneering deluxe hotel company to test the Las Vegas waters this way was Four Seasons Hotels, which, in 1999, successfully opened a 424-room property at the south end of the Strip. For many travel managers and meeting planners, Las Vegas lodging and meetings remain synonymous with the large casino/convention hotels that first brought the destination renown. Nor has this aspect of Las Vegas disappeared. Developer Steve Wynn, famous for the Bellagio and the Mirage, presently is building his latest mega-project, the 2,700-room Le Reve. Located on the south end of the Strip, Le Reve will have an 111,000-sq.-ft. casino and is scheduled for completion in 2005.
By contrast, not only are the room counts more modest at the new Westin Casuarina, the Ritz-Carlton Lake Las Vegas and Four Seasons Las Vegas, but gaming is played down. In fact, neither the Four Seasons nor the Ritz-Carlton have casinos on property, though gambling certainly can be found in adjoining facilities. The casino at the Westin will be a modest 20,000 square feet.
While Las Vegas as a hotel market has not suffered as severely as many other U.S. destinations in the current downturn in travel, neither has it been immune to these fluctuations. Lodging industry tracking firm Smith Travel Research does not measure Las Vegas performance since it is not one of the country's top 25 markets. STR does track performance by state and Las Vegas is Nevada's dominant hotel market. In 2002, the state's occupancy rate was down 2.9 percent over 2001, compared with occupancies in Houston and San Francisco, for example, which were down 8.1 percent and 4.9 percent, respectively. The state's revenue per available room for 2002, meanwhile, showed a more precipitous decline. RevPAR was off 5.4 percent, compared with 2001. By contrast, revenue drops in Houston and San Francisco were 7.5 percent and 17.4 percent, respectively. As in other markets, the occupancy/RevPAR discrepancy suggests that hotels, concerned with the weak industry outlook, cut back too far on room rates as a way of stimulating demand.
"There's certainly been a movement in the city, not necessarily away from gaming, but toward luxury and high-end properties," said Four Seasons general manager George Cordon. "It's been quite noticeable. As is often the case when new properties that offer a higher level of service enter a market, others already here start to upgrade in order to remain competitive."
To counter the high energy of the Strip, Cordon said such properties as the Four Seasons try to provide an escape where group attendees and individual business travelers can concentrate on the work at hand. "We focus on providing high levels of personal service consistently. In fact, we like to think we can help soothe all the senses. At the same time all the bells and whistles Las Vegas is famous for are in close proximity."
Likewise, the Westin Casuarina, which is a renovation of the former Maxim Hotel, will focus on service delivery, what it calls its signature "modern luxury," including the Heavenly Bed and Heavenly Bath. "We're completely refurbishing the property to reflect Westin's standards, not only in the guest rooms, but in the eight meeting rooms," said Sue Brush, senior vice president for Westin brand operations. Two of the eight spaces are boardrooms designed for groups as small as 12 people.
From a distribution point of view, the new project is significant since Starwood previously had a presence in Las Vegas with Caesars Palace and the Desert Inn, which were sold in 1999 and 2000, respectively. Ironically, the Desert Inn was acquired by Steve Wynn, who demolished it and now is constructing Le Reve on the site. Casuarina also is the name of a Westin hotel in the Cayman Islands. The two properties share the same ownership.
The Ritz-Carlton is the anchor of the Lake Las Vegas development, which is located 17 miles east of the Strip. According to Mark Ferland, vice president of sales for Ritz-Carlton Hotel Co., one of the property's primary appeals for meeting planners is its proximity to downtown Las Vegas, while at the same time being a fully self-contained destination. Its ratio of meeting space (33,000 square feet) to the number of guest rooms is the most of any hotel in the Ritz-Carlton system.
"When you think of key U.S. destinations, Las Vegas is certainly high on the list, so we very much wanted to have distribution here," Ferland said. "This means we now can say to our existing clients, 'When you have meetings or individual travel coming to Las Vegas, you don't have to book elsewhere.' "
Brush and Ferland, however, are likely to find those bookings being made on a very short-term basis. Like other destinations in this economy, the booking pattern has become extremely narrow. "For groups, we've seen some meetings book within 30 days," the Four Seasons' Cordon said.
The property has 27,000 square feet of meeting space. "A lot of the logistics simply have changed," he said. "We're not surprised when a planner calls and wants to book a meeting for 50 people or 60 people two weeks out. We just view it as a challenge we're prepared to meet."