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August 17, 2017

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Capping a ‘decade of extremes’ :

Best and worst of Las Vegas’ tourism times on display during In Business’ lifetime

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Steve Marcus

Construction on MGM Mirage’s $8.5 billion CityCenter put thousands to work. After it was completed, 12,000 people were hired.

With apologies to Charles Dickens: For the Southern Nevada tourism industry, it was the best of times and it was the worst of times during the 2000s.

It was the best in 2007 when 39.2 million tourists visited Las Vegas, the gaming and resort industry looked unstoppable and a record 47.7 million passengers passed through the gates of McCarran International Airport, prompting officials to begin building Terminal 3 and work on environmental reports for a proposed second airport in Ivanpah Valley, south of Las Vegas.

But in the next two years, it seemed to be the worst of times as the economy spun out of control. Battling for survival, airlines reduced capacity, particularly in low-yielding leisure markets such as Las Vegas. As unemployment and home foreclosures climbed, tourism and gaming numbers fell.

Projects that seemed like surefire winners — the 68-floor Fontainebleau, Boyd Gaming’s Echelon and Las Vegas Sands’ St. Regis-branded condominiums — were shut down. MGM Mirage struggled to complete its $8.5 billion CityCenter, which backers said would pace Southern Nevada’s economic rebound.

US Airways led the pullback from McCarran, cutting more than three-quarters of its 130 daily flights over two years. During the decade, some airlines went bankrupt and disappeared — ATA, Aloha, MAXJet and National among them.

Dallas-based Southwest Airlines, which climbed into the position of market leader at McCarran in the early 1990s, continued to be its busiest carrier over the past 10 years.

Allegiant Air, which moved its base of operations from Fresno to Las Vegas in 2001, has continued to grow here and expanded through its business model of linking resort areas to small cities.

Although some companies were wiped out by the Great Recession, others chugged along within an environment of reduced revenue. Tropicana Entertainment, Station Casinos, Herbst Gaming and Black Gaming filed for bankruptcy protection, while MGM Mirage, Las Vegas Sands and Harrah’s Entertainment raised capital and exchanged debt to beef up balance sheets. Room rates plummeted, and industry analysts found that travelers were coming to Las Vegas with less money to spend for entertainment, food and gambling.

For Southern Nevada, the recession truly was the worst of times. The region’s tourism economy had gotten a taste of how bad things could be in 2001 when the 9/11 tragedy chilled the industry and in 2002 and 2003 when fears of an outbreak of severe acute respiratory syndrome kept many would-be tourists at home. Travel fears also escalated in early 2003 when the United States led an invasion of Iraq that resulted in the downfall of Iraqi President Saddam Hussein, but also kept many people, who feared terrorist retaliations, at home.

One of the keenest observers of Southern Nevada’s tourism scene is Don Snyder, a former banking industry leader and Boyd Gaming executive who will take on a new career challenge July 1 when he becomes the interim dean of UNLV’s Harrah College of Hotel Administration.

Snyder said one of the most important lessons learned from the tourism industry’s last decade is the realization that the old rules no longer apply.

“If you go back beyond the last 10 years — really the last two or three decades — Las Vegas had a history of reinventing itself,” Snyder said. “Many say this began with the Mirage in 1989, but I think it even started before that.”

Snyder said the Great Recession proved that Las Vegas is no longer recession-proof.

“If we were impacted negatively, we were the last in and first out,” he said. “But this time, we were one of the first cities affected by the economy and we will be one of the last out of this particular downturn. All operators have to re-evaluate the operating model to be sure that can produce the bottom line.”

But most of the stretch when In Business Las Vegas was covering tourism since June 2000, times were good.

That was the year that MGM Grand announced what at the time was the largest corporate buyout in gaming history in acquiring Mirage Resorts. It also was the year that Station Casinos bought the Santa Fe and began building Green Valley Ranch Resort, while Caesars Palace announced it would build a third hotel tower.

Although 2001 started hot for Southern Nevada tourism, it all turned tragic on Sept. 11.

The Orleans had just announced a $100 million expansion that included a 620-room hotel, a 9,000-seat arena and a 40,000-square-foot casino, and Mandalay Resort Group announced plans to build a 1.8 million-square-foot convention center at Mandalay Bay.

But the euphoria of 2001 ended when terrorists crashed two airliners into the World Trade Center in New York and another into the Pentagon in Washington while a fourth plane apparently destined for Washington went down in rural Pennsylvania.

The skies over Las Vegas were eerily quiet for three days when the nation’s airspace was closed. With a series of new security measures in place and tourists skittish about traveling, it took a year for Las Vegas to rebound to prior-year levels.

In 2002, Wynn Resorts announced a public offering for funds to build a new megaresort, at the time named Le Reve.

While 2002 was a recovery year, the Southern Nevada tourism scene heated up in 2003.

The Las Vegas Convention and Visitors Authority unveiled “What happens here, stays here,” an ad slogan that led to one of the most successful destination campaigns in history. McCarran introduced its electronic ticketing kiosk system, and the Stratosphere unveiled plans for new thrill rides, including the X Scream, 900 feet above Las Vegas Boulevard.

Mandalay Bay opened The Hotel, the Fashion Show mall completed a $1 billion makeover that included “The Cloud” and the Las Vegas Premium Outlets opened downtown.

It turned out that 2004 was a year of corporate shifts. Park Place Entertainment officially became known as Caesars Entertainment; Harrah’s Entertainment purchased Binion’s Horseshoe and its lucrative World Series of Poker; Boyd Gaming absorbed Coast Casinos; and Colony Resorts acquired the Las Vegas Hilton.

But two more deals were even bigger: MGM Mirage announced it would purchase Mandalay Resort Group and Harrah’s Entertainment said it would buy Caesars Entertainment. Both deals would be completed the following year.

The much-maligned Las Vegas Monorail began operations in 2004, and Las Vegas Sands began giving details about its $1.6 billion Palazzo.

The middle of the decade saw the opening of Wynn Las Vegas, at $2.7 billion the most expensive resort ever built. But that eventually would be topped by an project announced later in 2005 — MGM Mirage’s CityCenter, planned to exploit a new market niche: high-rise luxury Strip condominiums.

Houston-based Landry’s Restaurants took over the Golden Nugget from two Las Vegas entrepreneurs who built a following for the resort around a reality television show. A new wing of McCarran’s D Gates opened as the number of flights increased.

By Las Vegas standards, 2006 was a lightweight year.

Boyd Gaming announced it would build Echelon Place — later shortened to just Echelon — at the site of the Stardust. The Palms broke ground on the Palms Place condominiums and opened its Fantasy Suites on the 25th and 26th floors of the existing resort.

Las Vegas got its first off-Strip resort with a billion-dollar price tag when Red Rock Resort opened in the western valley. The former San Remo on Tropicana Avenue became Hooters. Wynn broke ground on Encore and downtown’s Lady Luck closed its doors for a renovation.

Cirque du Soleil opened its fifth show, “Love,” at the Mirage, celebrating the music of the Beatles and replacing longtime Las Vegas icons Siegfried & Roy after Roy Horn was severely injured by one of the pair’s white tigers.

In 2007, the Aladdin became Planet Hollywood and the resort’s Desert Passage mall became the Miracle Mile Shops.

Harrah’s Entertainment announced plans for a new tower at Caesars Palace, MGM Mirage’s Luxor unveiled renovation plans and the Silverton planned a $130 million makeover.

Anthony Marnell announced details for a property on the south end of the valley, M Resort.

The full weight of the sluggish economy continued to bear down on Las Vegas in 2008, but both the front and back end of the year were marked with major resort openings. Palazzo officially opened in January and Wynn’s Encore greeted its first guests in December. Aliante Station also opened that November. Like Green Valley Ranch, it’s a joint venture with an affiliate of The Greenspun Corporation, owner of In Business Las Vegas.

Although the Golden Nugget completed a $60 million expansion, other projects were stopped or became iffy. Echelon construction was shut down in August. An entertainment icon, Star Trek: The Experience, closed at the Las Vegas Hilton.

On the plus side, the final wing of McCarran’s D Gates opened.

By 2009, there was even more trouble: Fontainebleau, Cosmopolitan and even MGM Mirage and its massive CityCenter project had near-death experiences. The LVCVA shut down a massive renovation of the Las Vegas Convention Center. Hotel rooms at Black Gaming’s Oasis property in Mesquite were closed, and Herbst Gaming’s Buffalo Bill’s property stopped selling rooms in the middle of the week.

Positive tourism news was in short supply, but there was enough to keep most people optimistic as visitor volume, gaming revenue and average daily room rates plummeted.

M Resort opened its doors in March, the Hard Rock, Golden Nugget and Westgate Resorts at Planet Hollywood unveiled new towers and the Hard Rock Café opened a new flagship operation on the Strip.

As the year wrapped up, CityCenter opened Vdara, the Mandarin Oriental and Aria and the ultrahigh-end Crystals retail center.

On the entertainment front, Disney opened a version of “The Lion King” at Mandalay Bay, Carlos Santana started a residency at the Hard Rock, Garth Brooks came out of retirement to headline at Wynn Las Vegas, Cirque du Soleil opened an Elvis show at Aria and ground was broken downtown for the Smith Center for the Performing Arts.

So what has the Las Vegas tourism industry learned from this decadelong roller-coaster ride?

Snyder thinks some of the answers are in leveraging the city’s strengths — its resort infrastructure, for example — to diversify the economy. That ties in with the city’s focus to grow its international stature, he said.

“The Venetian and its management deserves a lot of credit for making the convention industry what it is,” Snyder said. “The Venetian has demonstrated that conventions and trade shows need to be a part of business growth. The creation of the Mandalay Bay Convention Center and the expansion of the Las Vegas Convention Center show that this is something that is bigger than anybody really expected.”

Snyder said the World Market Center and the furniture industry have pioneered the concept of developing a permanent industry home that uses the tourism infrastructure — the vast number of hotel rooms, the variety of entertainment and culinary experiences and the hundreds of nonstop flights to more than 100 destinations.

“The World Market Center has done it for furniture,” Snyder said. “The jewelry industry is looking at a similar concept. But think of it, there are lots of industries that could use the city to draw attendance for conventions and trade shows as well as operate business to business. The design industry, fashion, electronics. All of those have potential.”

Such a plan, he said, could assure more of the best of times for Southern Nevada.

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