This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.  Find out more here  Close
Las Vegas hotel market is on the way back
February 21 2013

While not back yet to record levels, hotel occupancies are improving in Las Vegas. However, average daily rates still lag historic highs.

  • A near-record 39.7 million visitors came to Las Vegas in 2012.
  • All-time-high occupancy for the Las Vegas was 90.4% in both 1996 and 2007.
  • New hotel projects are under development on the Las Vegas Strip and downtown.
By Ed Watkins
HNN contributor


LAS VEGAS—It’s been a slow but steady climb back to prosperity for the Las Vegas hotel market. Even though the city hosted a record 39.7 million visitors last year, the market of 150,000 guestrooms still hasn’t fully rebounded from dramatic dips in occupancy, average daily rate and convention attendance following the start of the recession.

“The market has shown gradual growth in the past several years, not overwhelming but at least in the right direction,” said Shannon S. Okada, VP and associate director of gaming for HVS Consulting and Valuation in Las Vegas. “And the new properties coming online will help Las Vegas keep its image as a tourism mecca, a place people want to come back to.”

Data released by the Las Vegas Convention and Visitors Authority show that 2012 was a year of improvement for the city’s tourism business. More than 800,000 additional visitors came to Las Vegas than in 2011. That’s an increase of 2.1%, although the market failed to crack the 40-million visitor count that tourism leaders projected. Hotel occupancy climbed just 0.6% to 84.4% and ADR rose 2.8% to $108.08, according to LVCVA 2012 visitor statistics.

As recently as 2007, occupancy topped 90% (90.4%, tying a record set in 1996) before falling 10 percentage points by 2010. But as Scott Russell, senior research manager of the LVCVA noted, while the market achieved 84% occupancy last year with 150,000 rooms, Las Vegas only had 99,000 rooms in its first occupancy record-setting year of 1996.

“Las Vegas has shown for many years its ability to absorb a lot of inventory while maintaining high occupancies,” said Russell. “In fact, last year our occupancy was 23 points higher than the national average, and we’ve been 22 to 24 points ahead of the rest of the country every year for many years.”

A changing business mix
While tourists and conventioneers are coming back to Las Vegas, the mix of business has changed, especially since the start of the recession in 2007, said Jim Cady, GM of the 190-room DoubleTree by Hilton near the Las Vegas airport.

Rendering of exterior of planned SLS Hotel on Las Vegas Strip

“We now get more drive-in traffic from southern California versus fly-in traffic,” said Cady. “In fact, airline passengers—both locals leaving and visitors coming in—only increased 0.4% in 2012, while drive-in traffic from California increased 4.5%.”

He added that a lot of the drive-in traffic is likely accessing discounted rates through Internet sites such as Hotwire,, and others. “And, with drive-in traffic, they are generally shorter-term, one- or two-night stays,” he said.

Some non-casino operators are struggling to compete with casino hotels that have drastically reduced room rates to maintain their occupancy. Roger Bloss, chairman and CEO of Vantage Hospitality Group, said an Americas Best Value Inn the company manages in Las Vegas has fallen victim to severe rate-cutting by competing casino hotels.

“It’s very difficult, if not impossible for us to compete with these casinos when they advertise nightly rates of $20 or $30,” said Bloss. The 262-room ABVI is a block off the Las Vegas Strip on Tropicana Avenue. “And 84% of visitors to Las Vegas have been here before and understand a little bit about the city. So, if you’ve been here before, would you stay at a casino hotel with a rate of $39 or at the ABVI at the same price?”

Bloss said his only defense is to continue to market to long-time guests “the old-fashioned way. We tout what some other properties don’t have: our location near the Strip and the freedom for guests to park in front of their door.”

Cady of the DoubleTree Airport doesn’t see occupancy returning to 2007 levels until 2015 or 2016. That’s when hotels will again be able to push rate.

“There are a few things that will hinder the occupancy growth that will offset any increase in visitors coming here,” said Cady. “Between hotels coming back online from renovations and new hotels coming into the market over the next 12 to 18 months, Las Vegas will see another 5,000 or more rooms added to the market.”

The largest new project in the works is the $400-million, 1,600-room SLS Las Vegas. Construction on the project, which is a total reimagining of the former Sahara Hotel, started last week with an opening scheduled for fall 2014. The groundbreaking happened days after the opening of Nobu Hotel, a conversion of a Caesars Palace tower into a boutique hotel owned by a group that includes actor Robert DeNiro and celebrity chef Nobu Matsuhisa.

Downtown Las Vegas is another focal point for development. The Plaza Hotel was refurbished using furnishings originally intended for the Fontainebleau Hotel, a half-finished Strip property that never opened. And the former Lady Luck, which has been closed since 2006, is being transformed into the Downtown Grand, a 743-room property that opens later this year.

Even though the market’s recovery has been slow, Okada of HVS believes these new developments make sense for the market. “If you look at the economic cycles in Las Vegas, history indicates that if you get in at the right time, there are some good opportunities,” he said. “The market needs to keep growing to ensure continued success.”

The city’s bread-and-butter convention and meetings business, which was hurt during the recession, is also improving but with mixed results. Convention attendance fell 5% in 2008 and 23.9% in 2009, according to HVS’ 2012 Las Vegas Casino and Hotel market outlook report. In 2012, the city hosted 21,615 conventions and meetings, up 13.6% and the most since 2008. On the downside, convention attendance only grew by 1.6% last year, an anomaly Russell of the LVCVA attributes to differences in meeting profiles from year to year.

“Some years we may have 20 very large shows and the next year only 10, but we may also have 100 mid-sized meetings, so the number of attendees is about the same,” he said.


Login or enter a name   Post Your Comment  Check to follow this thread via email alerts (must be logged in)
(4000 characters max)

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.

Hilton unveils Tru brand to fill midscale void
How independent hoteliers grab direct bookings
Is rate parity good or bad for the industry?
Sharing economy might be in Choice’s future
Tru design: Efficient rooms, versatile lobbies
Kimpton still grows a year after acquisition
ALIS 2016: LIIC members share opinions
Consultants share trends, advice for 2016
HSMAI Digital Marketing roundtable
Concord embraces change
Red Roof Inn on international track
Will Super Bowl expectations meet reality?
Industry outlook: A crash or soft landing?
STR: US results for week ending 30 January
Davidson launches Pivot as its lifestyle hub
Down cycle concerns complicate risk management
What’s alternative is becoming the new normal
Contact Us
Hotel News Now
18500 Lake Rd.
Suite 310
Rocky River, Ohio 44116
Copyright © 2004 - 2016 Hotel News Now, a division of STR, Inc. All Rights Reserved.   Privacy