A curious LAS contrast

 
Old May 24, 09, 9:05 am
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A curious LAS contrast

Can anyone infer the logic here... the economy in Las Vegas is taking a serious hit. Hotel rooms are going for a song, compared to past, typical rates. Yet, in the current fare sale for travel out of ATL, the fares to LAS are equal to the fares to LAX, higher than the fares to SFO. I would have anticipated a softening of the market into LAS.
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Old May 24, 09, 10:17 am
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Just guessing, but two possibilities come to mind:

1. The super-low rates and great deals on hotel stays are working and increasing interest/demand for LAS travel; or

2. Airlines have the ability to adjust capacity and, theoretically, keep the business in the 'sweet spot' that allows fares to stay up. In the hotel industry, once you build it, you're stuck with it and filling it at any rate is better than having no one in the room at all (not to mention that you might earn a bit more in gaming revenue from the same customer).
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Old May 24, 09, 7:23 pm
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More likely the total capacity to LAS has been reduced and there is no need to discount the capacity to fill it. Unlike casinos, airlines have the luxury to deploy their hardware to other markets
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Old May 24, 09, 8:27 pm
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Originally Posted by oliver2002 View Post
More likely the total capacity to LAS has been reduced and there is no need to discount the capacity to fill it. Unlike casinos, airlines have the luxury to deploy their hardware to other markets
I agree with this. US is systematically dismantling their LAS hub. In fact, they have nearly completely eliminated their old red-eye departure block. For the most part, everyone else has reduced service (with the possible exception of Virgin and Southwest). Thus, both supply (flights) and demand (passengers) has declined- likely leading to constant or higher prices.
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Old May 24, 09, 8:35 pm
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It also depends on who you travel on, and who they are competing with. Last year, LAS roundtrips to SEA under $200 were pretty rare before the price of oil started crashing. Now, not so much. The difference is SEA has three aggressive competitors with nonstops in AS, US and WN, as well as DL service through SLC and UA/VX service through SFO (and, if you're really feeling wacky, AA/NW service through LAX using AS codeshares to get you to LAX).
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Old May 25, 09, 9:25 am
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When I went in march I paid $168/RT ATL-LAS-ATL. Just gotta wait for a good fare sale. Ohh and this was the first weekend of March Madness too.
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Old May 25, 09, 9:53 am
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Unhappy Airlines Have Cut Capacity in LAS...

In fact, it's part of the reason that you're seeing so many hotel room deals in LAS. For years, airlines were willing to offer deeply discounted fares to LAS from the midwest and east coasts, in large part because they were able to at least break even or a bit better if they sold enough F or Y seats on a particular flight.

Here are articles (1 and 2) from this month and going back to 2008 (read: before gas prices were out of sight) discussing capacity cuts at LAS for varying reasons. LAS is so hugely dependent on air travel that, in concert with the double-whammy of the recession and the growth of gaming options across the US, LAS gaming revenue has taken a huge hit.

In the US economy, LAS and MCO are the canaries in the coal mine because they're inordinately dependent on tourism and entertainment (read: discretionary spending). Both are getting killed - Disney just went through a round of layoffs in MCO with more to come, apparently.

While I understand there's only one Las Vegas there are more regional gambling options than ever before. If all you want to do is get out for a couple days and gamble a bit, stay at a decent hotel and have a few reasonably priced meals, why pay to fly to LAS, even for cut-rate rooms, when so many other things there are still expensive, compared to regional gaming facilities?

The northeast (PA legalized casinos recently and new facilities have already opened near Allentown and PHL, with another on the way or opening in PIT), midwest and south (MO, IN, KS, IL, MI, IA, MS and LA, at least), all have commercial gaming.

Indian gaming has grown from $9 billion annually in 1998 to almost $27 billion in 2008, although a lot of that growth has come in CA and FL (according to National Indian Gaming Commission statistics, less than 20% of tribes earn over 80% of Indian gaming revenues). Indian gaming facilities have matured to the point where many have three or four star hotels, good entertainment options and well-run casinos in MI, WI, IA, KS, AL, FL, NY, AZ, NM, CA, WA, OR, MS and LA, at least.

Hopefully, LAS will rebound, but it could be a long time.
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Old May 25, 09, 3:10 pm
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Originally Posted by msnflier View Post
(according to National Indian Gaming Commission statistics, less than 20% of tribes earn over 80% of Indian gaming revenues)
That doesn't mean anything other than Indian Gaming is pretty much like everything else.

In virtually any non-random allocation, 80% goes to 20%. 20% of people pay 80% of the taxes. 80% of seats go to 20% of travelers. Etc. Etc.

Commonly referred to the 80-20 rule.
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