Future is Bright for Las Vegas Condo Hotels
Las Vegas Sets Record for Visitors in 2006
Feb. 14, 2007 — Condo hotel developers continue to be optimistic about Las Vegas. Why? All they need do is look at the numbers. Las Vegas attracted a record number of tourists in 2006.
Las Vegas had 38.9 million visitors in 2006, up slightly less than 1 percent from 2005. The region managed to increase the number of visitors by boosting the occupancy rate to 89.7 percent, up half of 1 percent from the previous year.
MGM Mirage spokesman Alan Feldman said casino companies and the Las Vegas Convention and Visitors Authority contribute to the higher visitation by working hard to fill hotel rooms during slow times.
Feldman said MGM Mirage, which has 36,000 rooms in Las Vegas, urges managers of smaller conventions to book rooms during slow periods and commit to multi-year deals.
"It helps us fill the gaps," Feldman said.
Convention traffic in 2006 increased 2.3 percent, to 6.3 million visitors, with a non-gaming economic impact of $8.2 billion, up 7.6 percent from 2005.
Feldman said maintaining high occupancy is a challenge every year as other destinations seek to divert visitors who would otherwise go to Las Vegas.
"There isn't anyone out there willing to cede business to us," Feldman said.
Occupancy rates in Las Vegas were 94.6 percent on weekends and 87.6 percent midweek. The overall occupancy rate has increased steadily since 2001, when it was 84.7 percent.
"There is not another market in the country that comes close" to Las Vegas, Feldman said of the rate.
The next closest market reported by the authority was Oahu, Hawaii, at 83.1 percent, followed by New York City at 82.8 percent.
High occupancy rates in 2006 also allowed hotels to charge more money for rooms. The average daily room rate rose $17 to $120. That was well below the $240 average room rate in New York City but higher than the $101 rate in Orlando, Fla. The average rate for the top 25 markets in the United States was $119, the convention and visitors authority reported.
"It is a bad thing for the customer," said Anthony Curtis of the room rate increase. "I guess it is a good thing for the operators."
He expects room rates to continue to rise as long as demand increases and hotel companies improve their techniques for rate yielding, a math-based pricing structure that fluctuates with demand. It is a concept similar to what airlines use to determine ticket prices.
"The really good news," said Joel Greene, president of Condo Hotel Center, a real estate brokerage specializing in condo hotels, "is that developers of area condo hotels under construction and their investors can feel confident that visitation to Las Vegas continues to grow and will help ensure that their rooms are kept filled and generating revenue." He cited developments like the Vdara Condo Hotel in MGM Mirage CityCenter as an example of a property that will benefit from the steady demand for guest lodging.
Learn more about Vdara and CityCenter here,
http://www.condohotelcenter.com/condo-hotels/featured-properties/mgm-city-center.htm.
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