Las Vegas has been tested before, and has proven to the world its ability to adapt, recreate, and reinvent the product visitors seek to experience in this desert paradise. Is this time any different? Well, just a bit. The economy has reached depths of historic proportions, stressing even the most stable and promising corporations in the world. As the saying goes, when the tide goes out, we will see who is wearing a swimsuit. Well, the tide has certainly gone out, and many naked companies are scrambling to get dressed. The shift in gaming (35 percent) and nongaming (65 percent) revenue, although a comfortable and multi-dimensional approach to a well-rounded gaming business, proved to be a crumbling model under this economic distress.
Does this mean hope is dwindling for recovery and Las Vegas as we know it? Absolutely not! It does mean we must depend on the experience, resiliency, and determination of the current employees and executives who have been fortunate enough to survive the drastic layoffs and cutbacks around the world. The financial freefall must first find a resting spot comfortable enough to begin the recovery period, either through bankruptcy, lender negotiations, deadline extensions, sales, or simply displaying the ability to find that silver lining while not reducing and sacrificing a guest's Las Vegas experience.
Is there a silver lining worth pursuing? The Las Vegas experience 50 years ago was once based on value and relationships rarely seen in a hospitality venue. One was able to pay a very reasonable price far below industry average while receiving service and an experience that provided guests with $1.50 worth of experience for every $1.00 spent. Oh yes, and they knew the guest by name, not number. The burden had shifted from the operator's responsibility to work diligently to establish relationships, to the guest's responsibility to just show up and be loyal.
Loyalty is transient now, and the Las Vegas scene remains hypercompetitive with enormous amounts of debt steering the ship. Where do we go from here? Well, we cannot remove the billion dollar structures or ignore the debt, so the silver lining lies somewhere in between.
The gaming operator's previous excessive spending resulted in one-of-a-kind products that also translated into high prices for the consumer and a level of corporate greed that eventually stressed and deteriorated the overall guest experience. Las Vegas for years has successfully tested the theory of 'build it and they will come," going back to the 1950's. The cover of Time magazine in 1955 asks the same question we are asking today, is Las Vegas overextended? Maybe overextended and overcommitted -- time will tell.
Now, where is the silver lining? We talked about the distressed part; let's talk about the blessed part. Las Vegas has some of the most qualified, experienced, and talented staff in the world. And for that Las Vegas must be grateful. Las Vegas must go back to the basics and not forget the customers are still here. The key term that seems to translate into the value that guests seek and once experienced is affordability and now luxury. The aggressive spending by operators has built the world's most beautiful and luxurious products the travel and tourism industry has to offer. And for that we must be grateful. It is now up to the operators to complement these products with customer service, affordable pricing, and continued high quality experience.
The operators must first begin to aggressively pursue and understand the drastic change in consumer behavior and how that translates into how we present this affordable luxury. Consumers are more honest today than ever before when describing the change in spending. This is also a natural and ideal time for academics and industry to come even closer together by relying on top researchers to present their discoveries and findings that will assist in establishing a more stable model moving forward. This cleansing period of the industry allows operators the opportunity to redevelop the identity that made Las Vegas the most visited spot on this planet. And for that we must be grateful.
The information we acquire by evaluating and studying the consumer's behavior becomes the formula for giving the consumer what they want. This will include the old school style of relationship building and not relying on loyalty to drive the business. The strategy for the future must focus on the development of people, recognizing the human differences or diversity, and realizing this is also what makes Las Vegas unique and valuable to the global traveler. And for this we must be grateful.