This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Vegas Boom Sees No End

"Whenever Wynn opens a new property, it does increase demand for visitation," said Gary Thompson, a spokesman at Harrah's Entertainment (HET), which is in the process of acquiring Caesars Entertainment (CZR) in a deal that will create the world's biggest casino company.

But a new supply of hotel rooms by itself is not enough, said Feldman and Thompson. The additions must be of high quality and come with new attractions. History reveals just slapping up a new hotel tower without new restaurants, retail shops or shows doesn't always boost demand.

Feldman said the Luxor, a Mandalay resort, roughly doubled its rooms in the 1990s but failed to offer significant new attractions, with initially disappointing results. "If the lesson hadn't been learned by then, it was absolutely learned at that moment," he said. "This is not about inventory. It's about attractions."

A more recent example suggests fresh supply is being gobbled up without hurting occupancy or room rates.

MGM Mirage's Bellagio opened its 928-room Spa Tower in late December, increasing the Bellagio's capacity by roughly 30%. Even so, occupancy for the entire resort has risen, Feldman said.

The company won't comment about the effect on room rates. But a weekly survey of Las Vegas room rates by Merrill Lynch analysts suggests they have remained firm, despite the expansion.

Midweek rates at the Bellagio have increased 7% on average from a year before, while weekend rates are up 34% year over year in the two months since the Spa Tower opened, Merrill analyst David Anders wrote in a research note. (Merrill Lynch does and seeks to do business with companies covered in its research reports.)

"We find it very encouraging that large assets can increase by 30% with no diminution in pricing," wrote Merrill's Anders.

MGM Mirage's Feldman pointed out that the Spa Tower came with plenty of attractions, including an elaborate spa, the Sensi restaurant and expanded convention space that will allow it to host larger group events.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.29 -15.93 -0.09%
S&P 500 1,975.65 -2.15 -0.11%
NASDAQ 4,496.5090 -9.3430 -0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs