LAS VEGAS -- This city's monument to the economic recession sits at the corner of Las Vegas Boulevard and Desert Inn Road, where idle cranes hover above a stark honeycomb of bare concrete. It was to be Las Vegas' latest playpen for the ultra-rich, the $8 billion, 5,000-room Echelon hotel and casino, a structure complete with fountains and gleaming glass towers bearing fanciful names like Delano and Shangri-La.
That's sort of a mind-set that's out there, when you're going to Las Vegas you're being extravagant and you're being wasteful. People don't want to appear wasteful and extravagant in a deep recession like the one the economists tell us we're in right now. It's really hurt this city.
But in August, with those towers having reached only 12 of their planned 55 stories, the money ran out. Construction won't resume until next year at the earliest. For now it sits, surrounded by orange jersey barriers and a chain-link construction fence, just another stalled building project in a recession-stricken metropolis that Forbes magazine recently called the "most abandoned" city in America.
The bright neon lights are still here, and the jingling sounds of slot machines still emanate from the casinos, and tourists still troll the Strip with adult beverages in hand. But behind it all, Las Vegas is hurting. Few cities have been hit by the recession as hard as the one that will host NASCAR this weekend at gleaming Las Vegas Motor Speedway. A severe downturn in the tourism industry combined with a real estate collapse have dealt this desert oasis a severe double blow -- the economic equivalent of a player at the craps table rolling snake eyes.
"We're very reliant in this town on people traveling to Las Vegas for tourism," said Chris Powell, president of Las Vegas Motor Speedway. "And people in a down economic time like we're facing right now -- probably the worst of our lifetimes -- just tend to pull back, and one of the areas where they pull back is on travel. Certainly a destination city like Las Vegas, it hits hard."
In that environment, Sunday's Shelby 427 is a welcome event.
"Every event is important to Las Vegas, as tourism is the key to our economy," said Julian Dugas, sports marketing director for the Las Vegas Convention and Vistors Authority. "Our partnership with NASCAR and the Las Vegas Motor Speedway provides great exposure for our destination with live television coverage and the coverage of national sports writers. Major events are even more important in this difficult economy, and we look forward to welcoming everyone for this year's race."
The downturn is evident in the statistics. According to the Southern Nevada Index of Leading Economic Indicators, complied by the Center for Business and Economic Research at the University of Nevada-Las Vegas, visitor traffic as of late 2008 was down nearly 10 percent from a year earlier. Gross gambling revenues were down 15 percent, airport traffic down 14 percent. Keith Schwer, director of the center, offered a bleak forecast. "It is highly likely," he wrote in his most recent report, "that we may see a few more months of difficulty before things get better."
But you don't need numbers to tell you Vegas is in a rough patch. It's obvious just driving through town. Billboards advertise Strip-view hotel rooms at unthinkably low prices. It's easy to find open tables at restaurants that once had an hour wait. Although there's still plenty of pedestrian traffic outside on the Strip, gamblers on one weekday night weren't exactly crowding the high-limit tables inside the casinos. Even the baggage claim area at McCarran International Airport, typically a sea of people, seemed a little less bustling than usual.
Yet in some minds, Vegas had it coming. Posh casino hotels like the Bellagio and the Wynn transformed the city from one that catered to middle America to one more welcoming of the super rich, a gilded clientele that didn't blink at $20 bottles of water, steep nightclub cover charges, high weekend table limits and room rates upward of $300 a night. Landing those "whales" -- Vegas parlance for big gamblers and spenders -- wasn't a problem when the economy was rolling along.
Now, their absence is being felt in the form of double-digit tumbles in gambling revenue and daily room rates. Race fans making the trip to Las Vegas are being greeted by some of the least expensive room rates in years. Casino magnate Steve Wynn, the architect of the high-end resort, even dropped rates at his new Encore property to a bogglingly low $159 a night.
Even President Barack Obama took a shot, telling companies receiving federal stimulus money to steer clear of Sin City retreats. "You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime," he warned last month. That stung the city's proud convention industry, and led at least one company -- Wells Fargo -- to cancel a planned convention. Other companies are shying away, not wanting to associate themselves with a city of spas, boutiques and Ferrari dealerships that's developed a reputation of being exorbitantly high-end.
"That's sort of a mind-set that's out there, when you're going to Las Vegas you're being extravagant and you're being wasteful," Powell said. "People don't want to appear wasteful and extravagant in a deep recession like the one the economists tell us we're in right now. It's really hurt this city."
And the foreclosure crisis has only made it worse. As in many burgeoning communities out West, developers in Las Vegas built neighborhoods full of tile-roofed tract homes as fast as they could during the housing boom of the late 1990s and early 2000s. Older casino hotels were imploded to make room for massive new projects, many of them featuring fantastical themes, that filled every nook and cranny of the south and central Strip. No more. Big commercial projects like Echelon are stalled or searching for new financing. And more than 67,000 properties were foreclosed on last year, dispelling for good the notion that Las Vegas was recession-proof.
"I think Las Vegas was almost ground zero for the tremendous boom in housing prices back in the late '90s and early 2000s and until a couple of years ago, when the value of houses was just skyrocketing," Powell said. "We kind of led the way when things sort of fell off the side of a cliff. Housing process have dropped drastically, foreclosures are through the roof. Already locals were hurting in this economy before it got bad nationally."
They also feel it over at the speedway, where roughly 70 percent of customers come from outside the state of Nevada. Powell will admit, selling tickets this year is more challenging than it has been. Track management has made some changes trying to spur business, things like dropping all beverage prices by $1, arranging for "fast chats" between fans and drivers or television personalities, even opening up the autograph windows in the Neon Garage. As for tickets to Sunday's Sprint Cup event, Powell said he has a few still left.
"I'm not guaranteeing any kind of sellout," he said. "In fact, we like to say we never sell out, because we find somewhere for people either to sit or stand. But I think we'll have a great crowd. It's going to be good for this city. It's an important event for this city, this weekend is, because it's a real shot in the arm to the local economy when NASCAR comes to town."
And right now, Las Vegas surely needs a shot in the arm. According to the Las Vegas Convention and Visitors Authority, last year's NASCAR weekend at the 142,000-seat facility resulted in an economic impact of $189 million. The year before that, it was $198 million. The speedway uses area business for almost every service the race track provides, putting money back into the local economy at a time when it desperately needs it.
"I talked to a couple of workers the other day on a property who work for a food service company, and this is a job they otherwise wouldn't have if it weren't for this race coming up this weekend," Powell said. "It's big for everybody, and the impact of this event trickles down throughout the economy, whether you're an employee of the speedway or an employee of a vendor for the speedway -- for instance, a printing company that prints the programs, the food service industry, the traffic and parking companies we work with, even the metro police and highway patrol. They are buttressed by the dollars we pay out for this event."
