Vegas Boom Sees No End

The normal laws of supply and demand don't appear to apply in Las Vegas.

One might expect the opening of new casinos and hotel expansions to dent overall occupancy or pull visitors away from existing properties. But in Las Vegas, flashy new projects tend to boost demand elsewhere, as visitors curious to see the latest entrant stroll down the street and into other casinos.

The next test of this phenomenon comes on April 28, when Wynn Resorts (WYNN) plans to open its ultra-luxurious Wynn Las Vegas resort, adding more than 2,500 new rooms to the Las Vegas Strip.

The resort is the latest project of casino impresario Steve Wynn -- renowned for developing the Mirage and the Bellagio -- and is expected to draw lots of high rollers.

So far, demand at Wynn looks strong, according to Goldman Sachs analyst Steven Kent, who met with Wynn management on a recent Las Vegas trip. Wynn Las Vegas has already booked 60% to 70% of its convention rooms for this year, while 2006 bookings are "ahead of schedule," Kent wrote in a research note. The analyst's own research suggests standard room reservations are going for about $300 a night, well above the company's original budget for around $200. (Goldman Sachs does and seeks to do business with companies covered in its research reports.)

Wynn Resorts did not respond to interview requests in time for this story.

One might expect other companies to be quaking in the face of a slick new resort. Instead, they're voicing optimism.

"Las Vegas thrives because of competition, not in spite of it," said Alan Feldman, spokesman for MGM Mirage (MGG), which expects to soon wrap up its $7.9 billion acquisition of Mandalay Resort Group (MBG). "Every time someone brings something really new into this marketplace, the market grows. When people come to Vegas, they're not isolated in one casino or one hotel. They come and here's this enormous a la carte menu of things to do," Feldman said.

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