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Downtown Upturn

With renewed interest in the area and commitments from the city and gaming operators, Downtown Las Vegas is expected to experience a renaissance-if it can survive the recession.

Downtown Upturn

Before the Las Vegas Strip was born, gamblers flocked to Downtown Las Vegas to roll dice and play cards at the Las Vegas Club and the Apache Hotel.

The casinos along Las Vegas Boulevard eventually eclipsed the gaming establishments on Fremont Street in terms of size and success, but Las Vegas Mayor Oscar Goodman has placed the revitalization of Downtown Las Vegas at the top of his priority list.

With renewed interest in the area and commitments from the city and gaming operators, Downtown Las Vegas is expected to experience a renaissance-if it can survive the recession.

The Economic Impact
Casinos across the Las Vegas Valley have seen declines in visitation and tourist spending, but Downtown Las Vegas continues to be affected even as profits rise on the Strip. In March, gaming win continued to decline, dropping 10.6 percent from March 2009. This is the 22nd consecutive month that gaming win has decreased; even in February, when casino operators were optimistic that Chinese New Year and the Super Bowl would translate to profits, gaming win Downtown declined 5.7 percent.

While the Strip has been able to draw tourists with lower room rates and deals on dining and entertainment, Downtown casinos have always offered value-priced rooms and amenities, and casinos like Boyd Gaming’s Main Street Station and California Hotel and Casino find themselves competing with high-end Strip resorts for cash-strapped customers.

“Many properties on the Strip, because of increased capacity as more rooms flooded the market as well as lower demand as you got less visitation, started lowering their rates,” says Steve Thompson, senior vice president of operations for Boyd Gaming’s Nevada region. “That created compression for anyone who competed with a value room product. Most businesses reach a point where you simply can’t price a product any lower. With that, then a tourist is forced to take a look and say, ‘Will I go to Excalibur or will I go to Main Street Station?’ As a general rule, a lot of them pick Excalibur and don’t risk visiting Downtown if they’ve never visited.

“We have a tremendous repeat visitation Downtown, and a tremendous amount of folks in the latest LVCVA study indicate a huge percentage of satisfaction in our product. But there’s also the lowest percentage of visitation that came to Las Vegas visiting Downtown in many years.”

The Bright Side
Downtown Las Vegas casino operators have not yet given up hope on the area. Many are investing in upgrades and renovations to make their properties more attractive when the recession finally ends and Strip resorts begin increasing room rates.

The Golden Nugget recently opened its new 430-room Rush Tower, which translated into a first-quarter revenue increase for the property’s owner, Landry’s Restaurants Inc. The El Cortez expanded its room offerings with the Cabana Suites. The Siegel Group, owner of a chain of extended-stay hotels, acquired the Gold Spike Hotel and Casino and opened a boutique hotel, the Oasis, on the property where a Travel Inn used to be. Mayor Goodman says he’s a fan of the Siegel team.

“They’re good people, they’re hard-working people, and they’re great community partners with the Downtown,” Goodman says.

The Downtown renovations signify investments in the future that have been matched by the city.

The Renaissance
Analysts and operators think Downtown’s future is secure with the city’s commitment to its redevelopment. With the creation of the Fremont East District in 2006, the city made it easier for entrepreneurs to bring business to the area in order to create a walkable community of bars and clubs. Lounges like Don’t Tell Mama, the Griffin and Downtown Cocktail Room now reside in the district, drawing locals and tourists to Fremont Street for entertainment.

The city’s two other main redevelopment efforts, the World Market Center and Symphony Park, have also stimulated the Downtown economy. Symphony Park will feature the Lou Ruvo Brain Institute, the Smith Center for the Performing Arts, the Charlie Palmer boutique hotel, a casino, residential buildings, a shopping district, a new City Hall and additional amenities that Downtown casino owners hope will drive traffic to their properties.

“The city’s redevelopment of the 61 acres (at Symphony Park) has been just a godsend for all of Downtown,” Thompson says. “The new City Hall, as it starts moving out of grading and into actual leveling, will bring hundreds of construction workers, who will spend dollars in the Downtown core, and then ultimately provide for even more employment. All of those things help to create a synergy that at the end of the day certainly helps everyone Downtown, and as businesses in the Downtown core and others have supported redevelopment, we are very, very enthusiastic for what’s going to occur as that development continues to grow.”

The old City Hall building will house the new Las Vegas Museum of Organized Crime and Law Enforcement, which is expected to attract approximately 600,000 to 800,000 visitors per year.

New Era, Old Mayor
Goodman has championed the redevelopment of Downtown Las Vegas, and will see a new era dawn in the neighborhood when he finishes his term in 2012.

“When I was elected the mayor, even though I had the same pair of eyeglasses on that I had all the years when I was practicing law, everything looked different to me,” Goodman says. “I saw the first signs of blight. I saw boarded-up storefronts; I saw lawyers moving out to the suburbs; banks relocating outside the city. There was a general lethargy in the Downtown. During my 35 years of practicing law before I became the mayor, I was traveling around inner cities throughout the United States and saw that when the inner city begins to falter, it has a reverberating effect throughout the entire community. Upon recognizing what was happening here, I pledged to myself that I would do everything possible to create a renaissance and revitalize the Downtown.”

The city’s commitment to Downtown could be the neighborhood’s saving grace.

“I think as long as the city of Las Vegas remains committed with its redevelopment program, whether it’s the Symphony Park site or the arena they’re considering Downtown, and as long as they’re sending positive messages to the development community and to the resort industry that the city of Las Vegas is committed to the Downtown area, I think the Downtown area will hold its own,” says economic consultant John Restrepo. “Whether we’re going to see a big spike in tourism activity Downtown over the next three to five years, I’m not sure. I think they’ll be able to hold market share, because of the commitment of the city. I think all those non-gaming related projects will go a long way to bring out the Downtown area and preserve market share.”

Goodman’s pledge to redevelop Downtown may become part of his personal rather than political agenda when he ends his mayoral career.

“Let’s put it this way: I’m not going to be the mayor forever,” he says. “I’ll put my money where my mouth is when I’m not here, and everybody will be able to have the best steak and biggest martini in the world at Oscar’s Speakeasy.”

Located in Downtown Las Vegas, of course.

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