Make us your home page
Instagram

Column: A tale of two resorts: down-price beats upscale

This is not a good economy in which to take a gamble.

Las Vegas has, and it's hurting casino profits. Disney has not, and the Magic Kingdom is reaping the winnings.

In theory, it's not supposed to be this way.

The gaming business often brags it's recession-proof because gamblers will always like to gamble, but amusement destinations historically have see their business get hard hit when wallets are pinched.

The upscaling of Las Vegas with its five-star hotels, restaurants and shops, and the down-pricing of Disney to more value-oriented park packages and hotels over the past decade has turned that concept on its head.

Plunging housing prices and soaring costs for gas and food have made Americans more mindful of their spending.

Yet, Walt Disney Co.'s theme parks and resorts have enjoyed success. They helped increase the company's fiscal second-quarter earnings by 22 percent from a year ago, to $1.13-billion, or 58 cents a share. Analysts had been expecting 51 cents a share.

Revenues in the parks and resorts division shot up 11 percent to $2.7-billion during the quarter, a gain that was partially driven by an increase in foreign travelers visiting its U.S. parks to take advantage of the weak dollar.

But CEO Robert Iger also said the company's broader offering of lower-priced accommodations and vacation packages is helping.

Las Vegas has done the reverse. The famed Strip's cheap hotels and all-you-can-eat buffets are mostly gone, replaced by first-class resorts, fancy restaurants with celebrity chefs, luxury retailers and high-end spas.

Gambling, once the lifeblood of this desert mecca, accounts for 41 percent of Las Vegas' revenues, while 58 percent comes from sales of food, beverages, rooms and shopping, says a report from investment firm Deutsche Bank. That's the opposite of what it was during the 1990-91 recession.

"We were recession-proof when gaming was the No. 1 source of revenue," said Sig Rogich, who heads a marketing firm bearing his name that advises casinos. "Now the paradigm has shifted, and we get hurt."

Through the end of February, the number of conventions held in Las Vegas had dropped 10.4 percent, and average daily room rates were off 3.8 percent to $129.89 in 2008, according to the most recent data from the LVCVA.

Suddenly cheap is in, something Las Vegas has spent a decade running from. Maybe it's time the Strip took some lessons from "The Happiest Place on Earth."

DISNEY, DOWN-PRICING:

In 1991, more than 55 percent of hotel rooms at Disney World were premium priced. Now, about 75 percent of rooms are considered moderate or value priced. Fiscal second-quarter earnings are up by 22 percent from a year ago.
LAS VEGAS, UPSCALING:

Fancy resorts and restaurants, including this at Wynn Resort and Country Club, have mostly replaced the Strip's cheap hotels and buffets. Gambling revenues were down by 4 percent during the first two months of the year.

Column: A tale of two resorts: down-price beats upscale 05/13/08 [Last modified: Wednesday, May 14, 2008 11:03am]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Three-hour police standoff ends, thanks to a cigarette

    News

    TAMPA — A man threatening to harm himself was arrested by Tampa police on Tuesday after a three-hour standoff.

  2. Another Hollywood nursing home resident dies. It's the 9th in post-Irma tragedy.

    State Roundup

    The Broward County Medical Examiner's office is investigating another death of a resident of the Rehabilitation Center at Hollywood Hills — the ninth blamed on the failure of a cooling system that became a stifling deathtrap three days after Irma hit.

    Carlos Canal, pictured at 47 years old, came to Miami from Cuba in 1960. Above is his citizenship photo. [Courtesy of Lily Schwartz]
  3. Despite Hurricane Irma, Hillsborough remains on pace to unlock hotel tax that could pay for Rays ballpark

    Tourism

    TAMPA — Despite the threat of a catastrophic storm, it was business as usual at many Hillsborough County hotels in the days before Hurricane Irma bore down on the Tampa Bay region.

    The Grand Hyatt near TIA closed during Hurricane Irma, but many other Hillsborough hotels were open and saw an influx.
  4. New Graham-Cassidy health care plan stumbles under opposition from governors

    Nation

    WASHINGTON — The suddenly resurgent Republican effort to undo the Affordable Care Act was dealt a blow on Tuesday when a bipartisan group of governors came out against a proposal gaining steam in the Senate.

    Sen. Lindsey Graham, R-S.C., joined by, from left, Sen. Roy Blunt, R-Mo., Majority Whip John Cornyn, R-Texas, Sen. John Barrasso, R-Wyo., Sen. Bill Cassidy, R-La., Senate Majority Leader Mitch McConnell, R-Ky., and Sen. John Thune, R-S.D., speaks to reporters as he pushes a last-ditch effort to uproot former President Barack Obama's health care law, at the Capitol in Washington, Tuesday, Sept. 19, 2017. To win, 50 of the 52 GOP senators must back it -- a margin they failed to reach when the chamber rejected the effort in July. [/J. Scott Applewhite | Associated Press]
  5. Early estimates peg Hurricane Irma damage at as much as $65B

    Banking

    The damage totals from Hurricane Irma are still being tallied, but early numbers are in: As of Tuesday, the storm is estimated to have caused between $42.5 billion and $65 billion of damage. That's according to a Tuesday release by Irvine, Calif.-based analytics company CoreLogic.

    Hurricane Irma is estimated to have caused up to $65 billion in damage, said analytics company CoreLogic. Pictured is 
Hermilo Munoz Castillo as wades down a flooded street to check on his home in southern Collier County, Fla. after Hurricane Irma passed. | [LOREN ELLIOTT | Times]