The Vegas Strip: Planned Hotel Room Development Declines

Illustrating the impact of the ongoing financial crisis and the difficulties in securing credit for long term projects on the lodging industry, Smith Travel Research last month showed a marked decline in the number of hotel rooms in the Las Vegas development pipeline. That figure was at 21,447 rooms in December 2008, more than 50 percent fewer than the 43,218 that were so listed in December 2007. Of those rooms in the current pipeline, 11,845 are categorized as in construction, down more than 47 percent from the previous year. Those figures represent some of the largest drops in any U.S. location in the Smith Travel Research/Torto Wheaton Research/Dodge Construction Pipeline Report.

Wynn's 2,000-Suite Encore Opens Its Doors
Not every large Las Vegas project is imperiled, however. Wynn Resorts in December opened Encore, a $2.3 billion, 2,034-suite hotel and casino connected to the company's flagship 2,716-room Wynn Las Vegas hotel. Encore features five restaurants, 11 retail outlets, seven bars and lounges, a nightclub and a spa and salon, but not the same emphasis on meeting space as its sister: Encore offers about 60,000 square feet of configurable event space, including boardrooms and a ballroom, compared with the 223,000 square feet of meeting space offered in the Wynn Las Vegas. Opening a major new property at the height of a recession has its risks, as chairman and CEO Steve Wynn acknowledged in an October Wynn Resorts conference call. "We have got a very, very dynamic program to open Encore, but in good times, you might project 95 percent occupancy. That is what we always have had for the last 40 years: 95 percent to 100 percent occupancy whenever we open a new hotel," Wynn said. "Let's say now, I'm not sure we are going to be able to beat past 90 percent. We might be in the 80s. Maybe mid-week you could be in the high 70s and low 80s in the worst-case scenario in 2009."