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Casinos in Las Vegas Affected by the Weakening Global Economy
After the September 11th, 2001 attacks, Las Vegas incurred a drop in gaming profits of 1%-the only time in history that Ls Vegas suffered a drop-but the casino facilities recovered quickly. On July 11th, 208, Las Vegas has suffered a dropped in gaming profits by 4%. The turbulent and weak economy is affecting a lot of sectors in the United States and casino proprietors are reported to be very worried that its traditional belief that Las Vegas cannot be affected by the recession may come back to haunt them.
A combination of increasing oil prices, a growing problem in the housing industry and the reduction of airline flights because of cut backs, has made a situation that can affect the growth of Las Vegas. Retail shops and restaurants are one of the most affected businesses because of the weak economy but casino facilities rely on those industries for profits rather than the casino games itself.
A smaller number of visitors during the summer months are now putting the squeeze on the casinos. A lot of casinos have also borrowed a lot of money to finance their gaming expansion but four casino organizations in Las Vegas have already hit the maximum allowed amount for their financial buffers. Tropicana Entertainment was the biggest loser, defaulting a total credit of $2.7 billion.
The largest of them all, Harrah's, which managers eight casino facilities on the Las Vegas strip, including the Caesars Palace incurred a 4th quarter loss. Other evidences that Las Vegas is feeling the heat are that some of the big casino projects have been stalled for the time being.
Like the planned 2nd tower for Donald Trump's new hotel and a plan to construct a $6 billion replica of New York's Plaza Hotel. Even banks are demanding that the casino borrowers should maintain a minimum degree of cash flow.
Sunday, August 03 , 2008
Edward O'Connor