Las Vegas Room Occupancy Rates Bounce Back

roomsLas Vegas is not going back to their heyday of charging $500 per night room rates.   With ever increasing competition and the growing room inventory, those days are probably gone forever.  

But visitors are now at least starting to return to the bright neon of Las Vegas, lured by the lower relative room rates and successful direct marketing drives by Las Vegas hotels that are filling the weekday void left by conventiongoers whose budgets have dwindled. 

Las Vegas vigorous room marketing efforts are at last starting to pay off.  

With Las Vegas hotel demand and occupancy rates inching upwards, Las Vegas resort executives are rethinking their room strategies and are considering increasing room rates, a move that could contribute to improving their sagging profit margins and contribute to the start of a healthy Las Vegas business rebound in 2010. 

“The weekends are consistently solid now,” MGM Mirage CEO Jim Murren said during a conference call last week to discuss first-quarter earnings.  “Even when we don’t have a major event we are able to occupy rooms at a solid level.” 

In January, MGM Mirage’s hotels had an occupancy rate in the 70s- a respectable statistic for many major cities but ranked poor for Las Vegas, where hotels have historically operated at higher than 90 percent occupancy.  That figures has risen each month this year, reaching 95 percent in March and 97 percent in April, in line with a year ago before business worsened. 

Las Vegas room rates although increasing, are still depressed, according to official figures from earnings reports and tourism officials.  MGM Mirage’s revenue per available room was $102, or 34 percent lower in the first quarter than the year-earlier period. 

Undaunted, Phil Ruffin, who bought Treasure Island from MGM Mirage in March, plans to raise their room rates.  “I’m not going to give rooms away.  That’s a heads-in-beds philosophy,” Ruffin said.  “I don’t want the $50 customer.” 

You can still make money – more money, in fact – by running at 70 to 90 percent occupancy and charging more for rooms, according to Ruffin.

Whether this strategy and others like it continues to work depends on the ongoing reaction of recession-battered tourists that have now tasted sweet vintage hotel price deals in Las Vegas.  

Las Vegas tourism growth, analysts say, will only continue if tourists believe they’re getting a bargain and a good combination deal- not just a good room rate, but meals, shows and drinks as well.

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