Las Vegas takes big hit as fear of flying cuts tourism

Some 15,000 hotel and casino workers have been laid off or had their hours significantly reduced since the Sept. 11 terrorist attacks, as the city--and the rest of Nevada--adjust to a new, flailing economy.

The attacks--and the resulting fear of flying--have cost Las Vegas as much as $30 million a day in lost tourism revenue, estimated the city’s leading economist.

“Never before has this city taken such an economic hit,” said Keith Scherwer, director of the Business and Economic Research Center at the University of Nevada, Las Vegas.

Unemployment claims have increased more than 50% above normal.

Punctuating the city’s economic straits, the $1.2-billion, 13-month-old Aladdin hotel on Friday filed for Chapter 11 bankruptcy protection. The resort, the Strip’s newest, has struggled financially virtually since it opened, and was in imminent danger of foreclosure and having its slot machines repossessed because of the past weeks’ worsening conditions.

But while Las Vegas is glum, the rest of Nevada is mostly holding its own--and in some cases, faring better than normal.

Reno tourism officials say travel there has dropped only slightly--but the town is now resigned to market itself as a regional, versus national, destination because some airlines have eliminated long-haul flights to the city after the attacks.

In the little town of Wendover, in northeastern Nevada, casino and hotel business is flourishing.

The reason, hotel executives say: Wendover is a two-hour drive from Salt Lake City, attracting Utah residents who have stopped flying to Las Vegas.

“We’re seeing customers we haven’t seen in years,” said Michael Devine, president of the State Line and Silver Smith casinos in Wendover.

But because Nevada revolves around Las Vegas, where 46% of the city’s 35 million annual visitors arrive by airplane, the entire state is bracing for a financial fallout.

About a third of the state’s revenue is generated by gambling taxes, and another third from sales tax, including purchases by tourists.

Nevada is so shaken, Gov. Kenny Guinn took to statewide live television last week to offer comforting words.

‘Battle-Tested . . . Battle-Ready’

Referring to Nevada’s birth as a state during the Civil War, Guinn concluded his remarks: “We must . . . send a message that Nevada was not only born of battle, but her people are battle-tested, and her people stand battle-ready.”

Guinn implored banks, utilities, medical providers and other businesses to cut their late-paying customers some slack, and promised to speed up the delivery of unemployment and welfare checks.

He also asked university regents to explore offering tuition assistance for displaced workers needing retraining.

The number of unemployment claims nearly doubled in the first full week after the attack, from 2,922 to 5,549, state officials said. During the first four days of last week, another 4,453 people sought unemployment benefits.

Casinos are reducing staff costs all around town. Work hours at the Venetian, for example, have been reduced 27%, and about 100 employees have been laid off, a spokesman said. The Mandalay Resort Group, owner of Mandalay Bay, Luxor, Excalibur and Circus-Circus, has laid off about 4,300 employees--15% of its staff.

At MGM Mirage, the largest local casino employer with 37,300 employees at eight casinos, as many as 3,000 people may be laid off--but some may be called back to work on weekends because sharply reduced rates are helping to fill rooms, said spokesman Alan Feldman.

Meeting expenses has never been more precarious, he said.

“Our payroll is $126 million a month,” he said. “If you take every penny we made after taxes last year--$250 million . . . we’d only have enough money to meet eight weeks of payroll, and then the entire enterprise could close down.”

The local tourism industry, which all but eliminated advertising immediately after the attacks, will launch aggressive marketing campaigns this week to try to lure gamblers back to Sin City.

“The basic theme will be, it’s OK to travel again,” said Manny Cortez, president of the Las Vegas Convention and Visitors Authority. The tourism agency normally spends $51 million a year promoting Las Vegas; the new eight-week campaign, targeting gamblers in Los Angeles, Phoenix and San Francisco, alone will cost $13 million.

Businesses in town are counting on its success.

Spago, for instance, plans to reopen on the Strip next week after having closed for a monthlong, $1-million renovation. Its four sister restaurants operated by Wolfgang Puck have reduced prices as much as 20% because business dropped to 50% of normal, said Spago managing partner Tom Kaplan.

Even as some construction projects in Las Vegas have been suspended, including a skeletal convention center alongside Mandalay Bay, two new, off-Strip casinos are opening in coming months.

“It’s an understatement” that his casino has had no problem hiring employees, said George Maloof, president of the new Palms resort. At the Station casino, more than 50,000 people have applied for 1,150 jobs.

On Friday, thousands of Culinary Union members met at the Las Vegas Convention Center to discuss how to weather the stricken economy.

Among those hoping for answers was Anna Escobar, 54, who was laid off as a Mirage housekeeper, just three weeks after buying a new Nissan Sentra. She now is not sure how she’ll make her $420-a-month car payments and her $840 rent. “I have too many things to pay,” she said.

The union is considering asking hotels to forgo layoffs by having full-time employees reduce their hours to keep others on the payroll. But that proposal has divided union members.

“I’d rather be laid off altogether than lose hours to someone else,” said Harry McClintock, who polishes marble at Bellagio. “We’ve earned our wings. We have seniority. If I have to go part-time, I’ll stop paying my union dues.”