When folks run out of gas, they lose interest in sin. This does not apply just to the elderly. Ask Sin City — Las Vegas. High fuel prices are walloping incoming air and auto traffic. Hotel occupancy and gambling revenue have taken a nosedive, and heavily leveraged casinos are worried. Sensing trouble, Sin City officialdom in late April sent sequined showgirls to five cities, including San Diego, on a “glitz blitz” to titillate interest in tourism.
But don’t think San Diego will dance on Las Vegas’s grave. San Diego’s tourism is doing reasonably well but is expected to slow down in the fall. Very few travelers are expected to come to San Diego instead of Las Vegas. Local Indian casinos, which are generally hurting right now, are not likely to lure visitors from Los Angeles in any great numbers. San Diego tourists and Las Vegas tourists are a different breed. San Diego offers wholesome entertainment, such as SeaWorld and the zoo. Vegas’s animalistic attractions are quite different.
The two tourist destinations do have similarities. For example, Las Vegas gets 25 percent of its visitors from Southern California. San Diego gets 34 percent from the region, according to the San Diego Institute for Policy Research. Las Vegas gets 39 million visitors a year; San Diego gets 32 million. Overseas visitors (not including Mexicans and Canadians) are 7.6 percent of Vegas’s tourists and 3 percent of San Diego’s.
But oh, those differences. The average San Diego tourist spends $94 a day. The average Vegas visitor spends $556 on gambling alone. Half of Vegas’s visitors arrive by air. Only 26 percent of San Diego’s do. San Diego has the nation’s 23rd-largest convention center, ranked by size of exhibit space. Since Las Vegas has its own centers as well as big spaces in hotels, it has the 3rd-, 9th-, 10th-, and 20th-largest convention locations in the United States, according to figures compiled by the policy research institute.
But now Vegas is hurting. Statistics from the Las Vegas Convention and Visitors Authority show that air traffic was down 4.7 percent in May and down 2.4 percent thus far this year, compared with a year ago. Traffic at the I-15 Nevada/California border was down 5.6 percent in May and 5.0 percent for the year to date. Here’s the shocker: gaming revenues were down 18 percent in May and 6.4 percent for the year. Hotel occupancy was down 2.4 percent in May and 1.9 percent for the year to date. Another shocker: hotel room nights for conventions were down 9.0 percent in May and 9.7 percent for the first five months.
Attendance at the Las Vegas Convention Center dropped last year by 8.7 percent, says Heywood Sanders, professor and convention expert at the University of Texas at San Antonio. In 2002, the year after 9/11, the drop was only 3.1 percent. “That is pretty sobering,” says Sanders. He thinks the drop this year will be larger, and only partly because of construction activity there. In a soft or contracting economy, “What happens is that fewer people show up, and those that do show up spend fewer days.”
One Las Vegas money manager read in a survey that 50 percent of Californians would forgo Las Vegas if the price of gas got to $3.50 a gallon, and 80 percent would stay home at $4.33. He scoffed at those numbers, and since the price of gas has already passed those levels without making any such dent, his skepticism was proved on the money.
Airplane prices are headed up while flights are being cut. Result: “The prices go up, the hassle increases,” says Sanders. Five airlines that had service to Vegas have filed for bankruptcy or ceased to operate since late last year. Larger carriers serving Sin City are cutting back. So you have to suffer more pain in the wallet and the psyche to get fleeced at the gaming tables.
Meanwhile, San Diego tourism is doing fairly well — thus far. According to Smith Travel Research, San Diego room occupancy for the single month of May of this year rose to 71.8 percent from 70.2 percent in May of 2007. Only 6 of the top 25 cities showed improvement this May. The average of the top 25 markets was a drop from 70.1 percent to 68.5 percent.
For the first five months of the year, January through May, however, it’s a different story. Room occupancy has dropped from 71 percent a year ago to 70.3 percent this year. The average room price has risen from $135.80 a year ago to $141.10, but that’s only modestly above realistic inflation. Occupancy in all of California thus far this year has dropped slightly while average room rent rose modestly. Nevada, on the other hand, has had a 5.5 percent drop in occupancy for the year to date.
San Diego won’t pick up Las Vegas customers “because the economy is the problem,” says La Jolla hotel guru Jerry Morrison. “There is a certain point for people at which demand starts to drop because they are worried about prices, jobs, the economy.” San Diego retail sales are down. People in San Diego and throughout the nation are cutting back on almost everything, and that includes gambling.
While San Diego has more Indian casinos than any other U.S. county, according to the institute, only 3 percent of tourists come here to go to those gaming dens. “People tell me that the Indian casinos are really hurting,” says Bob Rauch, who teaches hospitality at San Diego State and owns two hotels in Torrey Hills. Another source who works closely with the Native American casinos confirms that the major ones are ailing now. “Remember, they are a long way away too — in far East County and North County. They are vulnerable to high gasoline prices and the economic downturn,” says this source.
“San Diego is going to have an okay summer; it always does. But I am worried about fall bookings. People tell me they are down — conventions, groups, individuals,” says Morrison.
“Vegas is down more than San Diego because it is more of a fly market,” says Rauch. San Diego still has a certain cushion because most tourists drive here and, in a downturn or energy crisis, tend to cancel longer trips and come to San Diego. This year, “We will weather the downturn, but it will still be a downturn.” San Diego will pick up a few Angelenos who were going to gamble in Vegas, but that will be a small piece of the pie. Overall, this year “is turning out to be uneven. We are headed off the peak toward the trough, which will be in 2009.” Next year is when the pain really hits.
San Diego will not gain from Las Vegas’s woes, agrees Sanders. “Las Vegas is a bellwether for the larger economy.” San Diego will hurt along with other convention/tourist destinations.