LAS VEGAS — A long winning streak could be ending for retailers here, marking a new phase in the city’s evolution.
Reduced discretionary spending — the foundation of the entertainment, gambling and shopping mecca — is causing pain from the cash registers to the casinos with no quick end in sight.
“We’ve certainly revised our sales forecast for the coming year; we don’t want to overestimate anything now,” said Robert Chavez, chief executive officer of Hermès USA, which recently opened its second Las Vegas boutique in the Encore at the Wynn Las Vegas hotel-casino.
The area’s retail vacancy and jobless rates have almost doubled in the last year, and gaming revenue, tourism and convention business are spiraling downward. In addition, Las Vegas has the nation’s highest foreclosure rate for metro areas with a population of at least 200,000, according to RealtyTrac, which compiles the listings.
Unemployment rose to 10.1 percent in February, compared with 5.5 percent in the same year-ago period, and casino magnate Steve Wynn slashed employee salaries 10 percent to 15 percent.
Major projects such as CityCenter, a joint venture of MGM Mirage and Dubai World that includes hotels, gaming and condominiums, as well as retail, are being cut back or delayed.
MGM Mirage, the largest casino owner on the famed Strip, is trying to avoid default and other casino operators, including Harrah’s Entertainment and Las Vegas Sands, are struggling to meet debt obligations. General Growth Properties Inc., which owns and manages more than 200 U.S. malls, including Las Vegas’ Fashion Show, Grand Canal Shoppes at The Venetian and The Shoppes at The Palazzo, said Monday it is continuing talks with lenders to restructure billions of dollars in debt. General Growth is seeking to sell the Las Vegas properties, but with real estate credit tight and spending weak unloading them may be a longshot.
Mall landlords are reexamining their tenant rosters to be recession-appropriate. The Forum Shops at Caesars, which has set the standard for high-end retailing in Las Vegas, is now more interested in signing a casual eatery than a fine-dining restaurant because of the strained economic climate, said Maureen Crampton, director of marketing.
“The shopper is more conservative today, definitely, and they have been for quite some time,” she said. “We have to be realistic. We can’t set our expectations so high. This is not 9/11. People after 9/11 came to get away. It didn’t hit their pocketbook.”
Welcome to the Las Vegas where cheap buffets, half-price hotel rooms, steep store discounts, budget-friendly shows and slots are among the main attractions, while luxury brands that have catered to high rollers play second banana.
In the last 15 years, Las Vegas morphed from its roots as a gambling oasis into a luxury destination with world-class shopping, spas, restaurants and other attractions. After more than a decade of riding high, the economic turmoil has stripped away some of the city’s extravagant allure.
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