An alternative to low room rates?

Is the law of supply and demand catching up with casino hotels in Las Vegas? Binion’s hotel downtown is closing, which may be a sign of things to come if casinos aren’t able to raise their room rates and/or maintain high occupancy. From the LV Sun:

Binion’s Gambling Hall & Hotel in downtown Las Vegas will close its 365 rooms on Dec. 14 and lay off about 100 workers.Spokeswoman Lisa Robinson said the decision was made as a result of the economic downturn, which has decreased occupancy at the property and other hotels across the Las Vegas Valley.Robinson said Binion’s also will close the Binion’s Original Coffee Shop and discontinue keno. The casino, sports book, poker room and Binion’s Ranch Steakhouse on the property’s 24th floor will stay open.Robinson said the decision was made Friday. She said Binion’s hasn’t determined when the rooms might reopen.

via Binions to close all 365 rooms, lay off 100 workers – Monday, Nov. 30, 2009 | 11:14 a.m. – Las Vegas Sun.

With an impressive amount of high-end room supply due to come on the market, there will doubtless be pressure on everyone to remain competitive. If B-class properties are going for $80 a night and C-class properties are going for $30, it’s hard to justify spending $25 to stay in a D-class property. If room rates fall throughout the market as they have, at some point the cost of keeping rooms open exceeds the revenue they generate, and they will have to close.

This is a slight contraction in supply–just about equivalent to what Harmon will add when it opens–but it doesn’t bode well for the market. At least one operator is sufficiently pessimistic about the near-term future to take this extraordinary step. It wouldn’t surprise me to see more partial shut-downs like this before things turn around.

8 Responses to 'An alternative to low room rates?'

  1. FoolsGold says:

    Generate revenue?? A room does not generate revenue. Revenue is generated ONLY in the casino. Nowhere else. A hotel room is an expense as far as linens, housekeeping staff, security patrols, lights, and all that other nickle and dime stuff.

    Rather than taking their hotel off life support why don’t they just accept the fact that they are indeed a class D property and therefore they will do what they have to do to attract gamblers to their rooms.

    Make no pretense about it. Comp the rooms and be done with it. Whatever the nut for keeping the hotel open is, it will not be all that much lower when the hotel is closed. So quit trying to get 25.00 for your room. Quit trying to tease players into begging for a room comp or wondering about a room comp or hoping about a room comp. Comp the darned rooms. “25.00 a night but free if you gamble X dollars. Even if you win and win big, as long as you have gambled that X dollars, your room is free. No forms to fill out, no hosts to go visit. No fancy smancy points system that is only partially disclosed to you in advance. Just a Comp System that really and truly rewards you for your playing at our casino. Let them announce what RFB requires and let them compete on that basis. Rooms and meals are great ways to compete, but you are stuck with the room’s existing quality and you are pretty much stuck with the meal quality too … so you might as well give them away and compete on what you can adjust immediately, the price.
    You fire all those housekeepers and what are you going to get when things turn around .. new hires that you have to train? And who you hope will somehow remain loyeal to you even though you didn’t remain loyal to the former housekeepers?
    Casinos have been treating their employees and their customers bad enough, now its got to stop.
    Let the managers and investment bankers tighten their belts. Keep your employees, keep your customers and keep the doors open!

  2. ew1951 says:

    Gee. I’m sad to see this hotel close. This weekend I just finished reading three new Las Vegas Guidebooks (Fodors, Frommers? and the Unofficial Guide and another).

    It was good to catch-up on the info printed in these guidebooks. I haven’t read any of these in about 6 years…and it’s good to get an outside perspective on Vegas. (Although I was bothered that all three of these books STILL give Bugsy full credit for inventing Las Vegas!!).

    After reading these guides I figured that I’d someday like to try staying at the Golden Gate, El Cortez and Binion’s (old Mint Hotel tower).

    Well. It’s too late for the Binions’ idea I guess.

    I DID find out that Main Street Station is rated as the “best value” for a hotel room…and also is rated very high for their Porterhouse Dinner at the Rosewood restaurant…and good lobster deals at their Pirate restaurant. And their buffet gets very high ratings. I need to go and check on that sometime.

    BTW FYI: One of those guides listed their 5 best Vegas websites and Steve Fries (sp?) website was listed among that batch. Pretty good.

  3. I have been getting about two e-mails a week for the last year or so from various websites about discounted hotel rooms in Las Vegas. Here were some of the prices from August of 2009:

    El Cortez from $18
    Imperial Palace from $20
    Palace Station from $20
    Sahara from $21
    Fitzgeralds from $26
    Vegas Club from $26
    Riviera from $27
    Plaza Hotel from $29
    Stratosphere from $29
    Tropicana from $35
    Four Queens from $39
    Flamingo from $41

    The hotels downtown are going to have a hard time competing with the Sahara and the Riviera, let alone the rest of the Strip, considering they were both under $30 a night. I feel bad for Binion’s because it’s a classic and legendary name in Las Vegas but things like this happen when the economy goes bad. Hopefully thing will get better when City Centers opens, which happens to be today.

  4. ew1951 says:

    Hey Dave. Today, at our apartment (on Decatur about 70 yards south of Flamingo) they passed out “Road Closure Maps” for Sunday’s Marathon.

    I looked at the 8×10 three-page pamhlet and was amazed at the extent and area this marathon will cover. The city is doing a tremendous job in arranging the logistics of this run.

    I think you said you are going to run in it? If so, I wish you the best in simply completing ANY section of it. I’ll be highly impressed by any person who can complete the 6 mile section from Mandalay to the Stratosphere. Running any farther than that is almost beyond belief (for me. I’m sure I couldn’t run even one mile).

    This marathon is going to be quite an incredible experience for runners and spectators alike. I wish one runner would wear a video-head-camera…just so people could see the amazing perspective and sights of running thru heart of Las Vegas.

    I live at the 13.5 mile point (of the 26 mile run) and intend to watch the runners from our balcony.

    I assume you will be doing the “13 mile half-marathon” (which is an amazing feat in itself).

    This Rock ‘n’ Roll Run is an amazing thing (with so many runners from all over the world). Oddly enough…this is the first time I’ve ever seen a map of the event. I pray for good weather and wish you good luck in enduring ANY portion of the run.

    ***

  5. Dave says:

    Actually I’m doing the full marathon–I’ve even been talked into leading the 4:15 pace group, so I may be holding a balsa signpole for much of the race. We should be passing by your way at about 8:20-8:30, depending on how things go.

    It should be a lot of fun. This is my 5th Vegas marathon, and I’m looking forward to seeing what the RnR people do with it.

  6. ew1951 says:

    You’re running the full marathon?! That is incredible. Wow! Really.

    I spent a few hours just staring at the marathon route. It contains about 75 significant areas/segments/views/sections…etc (for lack of better terms).

    I hope you can get a chance to drive your car (a few days before the race) to take a look at the route from the 11 mile mark (behind the Mirage) to the 25th mile-mark. That section on Industrial to Twain is a strange turn.

    You must have the lungs of a buffalo. haha.

    I don’t imagine they let you get out of the runner’s formation, but..if you need someone to hold any supplies for you (such as a change of shoes, or dry socks…t-shirt, band-aids, energy bar,…Big Mac, Coke or fries) please let me know (ahead of time) and I’ll be waiting at the 14 mile marker.

    Otherwise I wish you the very best Dave. I’ll be out on Decatur (somewhere between Flamingo and University) watching and rooting for everybody.

    PS BTW: There are a few mild hills along Decatur. It isn’t as flat as most people imagine. haha.

    Later, Dave

  7. American Gaming Guru says:

    I have mixed feelings about this one. When I am in Vegas, I love to make a visit to Binions. I am; however, not a big gambler. My intention is mostly to tip my hat to this legendary dame in gaming. I love having a few rolls of the dice and a quick drink, but stay in their rooms I would never do. The hotel rooms are an absolute dump. While some may argue the casino is too, I would say that the casino is fun for its age and reputation but slip into one of their beds is taking in history to an new and unwanted level..my opinion anyway.

    As soon as I heard they were closing the hotel tower, it reminded me of an old Benny Binion quote. I wont put quotes around it, because I can not remember it to its precise wording. I believe he was talking to another casino owner on Freemont Street who either had a hotel tower or was building one. Benny had no interest in a hotel (prior to the Mint being bought) and said something to the affect that THEY CAN STAY IN YOUR PLACE AS LONG AS THEY GAMBLE IN MINE! Lets hope Mr. Caudill can keep the lights on.

  8. Dave says:

    Erik–thanks for the offer. We should be pretty well-provisioned with water stops each mile. Just knowing that that someone’s out there wishing us well is help enough.

    Also, I’ve driven the course a few times and have also studied the elevation map. You’re right, Decatur is tricky, and the whole stretch from about 10 to 19 is uphill overall. The tough part, I think, will be the two overpasses (RR and I-15)near the end when we’re ready for the finish. Still, it’s a relatively flat course and, depending on the weather, should be fun.