The sagging dollar frees up foreign currencies to buy more here, tax cuts free up money to spend on gaming and the end of the war with Iraq has freed some travelers from the fear of flying, analysts said in explaining their predictions of improved demand for Las Vegas rooms. Keith Schwer, director of the University of Nevada, Las Vegas' Center for Business and Economic Research said the weakness of the dollar and strength of the euro will be particularly important for Las Vegas this summer.
People are still going to travel and Americans won't want to spend the money to go abroad because of the weak dollar and fear of terrorism, so more of them will venture to Las Vegas, he said. At the same time, 'foreign travel is likely to pick up because of the currency exchange rates,' Schwer said.And foreigners traveling on relatively fixed budgets in terms of their own currencies spend more money in terms of dollars when they get here.
Las Vegas professor and casino gambling expert Bill Thompson said Las Vegas is looking strong because of a set of circumstances that also includes the recently passed federal tax cuts and ongoing fears of terrorism. 'The gambling public is affluent and they'll get (tax cut) benefits, so that'll help Las Vegas,' Thompson said.
Congress recently passed President Bush's $350 billion tax cut plan, reducing tax rates for most taxpayers and cutting taxes on capital gains and dividends while increasing the federal child credit to $1,000 from $600. Plus 'if people can shake the fear of flying, and concerns dim quickly these days, that'll also have a big impact,' he said.
Surging demand and the resulting rocketing room rates also should placate recent concerns on Wall Street, said Deutsche Bank analyst Marc Falcone. For the week of June 30, which runs through July 5, the average rate for rooms on the Strip booked three weeks in advance increased to $130, up 8 percent compared with the year before and up 13 percent compared with pre-Sept. 11, 2001.
Rates were up 13 percent for rooms in high-end properties and up 12 percent at mid-level resorts, but down slightly at value properties. This was the seventh consecutive increase in three-week advance weekly room rates.'We are encouraged by the continued firming of pricing, especially with the shorter booking windows, which we believe is now the 'norm' on the Strip,' Falcone said.
The survey for the July 4 week followed an 8 percent increase in rates for the month of June in Deutsche Bank surveys. 'Historically, the stock prices of the Las Vegas operators have shown a high correlation to rising and falling room rates, as forward room rate surveys have typically been a good forward indicator for the expected direction of estimates, in our view,' he said.
