Laughlin looks to halt decade of tourism declines

LAUGHLIN -- For much of the past year, several resort operators have pointed to the mess on Casino Drive as a prime culprit for their anemic finances.

The $10.4 million improvement project that Clark County launched in May 2010 to re-engineer and beautify the street, the town's counterpart to the Strip, constricted cars to one lane in each direction and obstructed driveways. Full access was recently restored although the work remains unfinished, thanks to the general contractor's bankruptcy filing in July.

Construction may have scared off some potential Laughlin tourists, but it doesn't account for the rest of the decade. The one-time boomtown has attracted fewer visitors each year since 2000, the Las Vegas Convention and Visitors Authority reports. This year, the unincorporated riverside town expects 2.4 million visitors, about half of its 1994 peak. Hotel occupancy has declined in tandem, although up slightly this year, and average room rates are stuck at around $40 per night.

For several years, the all-important gross gaming revenues ran counter to the visitor trends. But last year's revenues marked a 24 percent drop from 2007 to $482.4 million, the lowest level since 1997.

The sputtering national economy has stung, but the resorts place most of the blame on competition from Indian casinos in Arizona and Southern California.

"Probably the biggest impact on Laughlin is tribal gaming," said Lloyd Shires, operations director at the Riverside resort, which started the town when it opened 45 years ago. "They are a lot nicer, better resorts than 10 years ago. They have appealed to our main feeder markets in Los Angeles, the Inland Empire (near Los Angeles) and Maricopa County (Phoenix) because of the proximity, the price of gas and the general economy."

For some patrons, the tribal games are a better deal.

"My experience is that the Indian casinos tend to be more generous,'' gambler Marsha Weimer said as she boarded a charter flight at Laughlin-Bullhead International Airport on her way home to Bakersfield, Calif. "They should do that here."

With almost no other industry -- the nongaming economy is centered across the Colorado River in Bullhead City, Ariz. -- the rest of the town has suffered problems all too familiar to Las Vegas: empty homes and falling real estate prices.

"We all feel it," said Dana Banning, the wedding minister at the Laughlin Community Church. "People are generally taking the cheaper route, spending less, when it comes to tourism. Even the snowbirds have cut back."

A couple of years ago, Banning's wedding work fell after the Wedding Bureau office reduced its schedule from seven days a week to three. She notes that resort catering departments have trimmed staff as convention attendance dropped by nearly two-thirds since 2006.

This has spurred efforts by the Laughlin Chamber of Commerce to promote the city nationally and try to diversify. Efforts to attract alternative energy and distribution firms may soon bear fruit; a Chinese solar-panel maker is negotiating with the county to build a plant south of town that could bring thousands of jobs.

"I think this is an exciting time for Laughlin," said Anthony Timmons, the current chamber president. "I would paint a really bright picture of the future."

But that's the future. For now, and perhaps years to come, the nine resorts on Casino Drive are expected to continue driving the local economy.

RECOVERY STRATEGIES

In some ways, Laughlin faces the same bind that Las Vegas did in the 1980s, after the city lost its nationwide monopoly on casino gambling and no new properties had opened for several years to refresh the city's image.

The 10,350 rooms on Casino Drive represent about 450 fewer than a decade ago. Several properties have been renovated, but about the only new construction in recent years has been a Riverside casino across the street from the main property, which opened in 2003, and the E Center, an entertainment and convention venue the Edgewater finished in April.

Each resort has its own strategy for attracting more customers and pumping up hotel occupancy rates that sank to 65.7 percent in this year's first half after running at 88.4 percent 11 years ago.

On opposite ends of Casino Drive, Harrah's Laughlin and the Riverside have both invested extensively in charter flights to replace commercial air service that ended at Laughlin-Bullhead in 2001.

"We have a lot of people who like going there," said Gary Thompson, a spokesman for Caesars Entertainment Corp., which owns Harrah's.

Various promotions allow people to cash in Caesars loyalty points accumulated at other properties for comped flights to Laughlin.

"I came because of the free flight," said Oscar Hunter, a tourist from Fort Worth, Texas. "But a lot of other times, I go to Vegas."

The Riverside's charter network now extends to 64 cities in 29 states, Shires said. Sixty percent of the seats are sold as packages and the rest as comps, he added.

"When our feeder markets started to dry up, we went out to bring in new customers," he said. "Quite frankly, the rest of the properties have not been as aggressive."

Other properties have bet on the time-honored Las Vegas tradition of constant renewal to keep pulling in business -- with limited success.

The Aquarius, operated by Stratosphere parent American Casino & Entertainment Properties, completed a $54 million overhaul of the public areas and guest rooms three years ago, with the goal of being Laughlin's premium property. During this year's first half, the average room rate rose 6.1 percent compared with last year to $48.74 a night, according to American Casino's second-quarter report. But, at the same time, occupancy dropped and net revenues fell 3.8 percent to $46.1 million.

The report noted that the resort was "impacted by heavy promotional activity by our competitors," particularly the comped flights.

However, Aquarius doesn't discount to get more people in the door.

"One thing we will not do is sacrifice the rate integrity or the product or the service," Aquarius general manager Sean Hammond said.

Archon Corp., which owns the Pioneer, has also tried offering higher payouts than others on its casino machines to appeal to a gray-haired clientele. However, the company said in its financial reports that it expects only "marginal growth" for Laughlin in coming years, and that the recent revenue declines "may not change significantly over the next few years."

what laughlin needs

Resort operators say the return of scheduled airline service, particularly to Southern California, could be the catalyst in reversing the town's slide.

Cathy Tull, senior vice president of marketing for the Las Vegas Convention and Visitors Authority, said her agency had set aside marketing money as an incentive to persuade an airline to start regular service, but declined to release details.

"Other than (flights), it's about seeing the economy turn around," Archon Executive Vice President Sue Lowden said. "People do not have jobs and are not spending like they used to. That also applies to retirees who are now helping to support their children and grandchildren."

Lowden said it would help if a long-discussed events center for major entertainment attractions could be built. However, nothing concrete seems imminent.

Increasingly, the resorts have tried to put more prominent entertainers on their marquees or push special events. In August, for example, the Bullhead City River Regatta, a nine-mile floating party on the river, brought in an estimated 29,000 people. It started four years ago with 900. A Reba McEntire concert in March also helped boost both occupancy and room rates.

Las Vegas Events, a division of the authority, is studying other ways to bolster the event calendar, Tull said.

Others conclude that Laughlin needs a more dramatic makeover.

"Indian gaming will affect anyone whose sole draw is gaming," said Phill Brack, president of Brack Construction in Bullhead City. "The older demographic that that worked for is disappearing. The new demographic wants more to do than just drop a quarter in a slot machine,"

He said he can envision a major upgrade of the riverwalk that connects most of the resorts. It's not easily visible to tourists and offers only limited access to the river.

Some people point to the $28 million Laughlin Regional Heritage Greenway Trails Park equestrian and hiking trail, due for completion in October, as an opportunity to market the town as a more outdoorsy way to enjoy Nevada's biggest industry. The path will start at the north end of town and meander along the river about three miles to the Davis Dam.

The resorts already pitch themselves to travelers who seek a getaway in a place less frenetic than Las Vegas.

Brad Mays, owner of Laughlin Adventure Tours, said his bookings have continued to grow, partly because of the company's desk inside Harrah's, with its throng of comp visitors. He plans Grand Canyon flights in a few months.

Like many here, he sees the town's unique asset -- the Colorado River -- playing a bigger role in the local economy.

"If we put everything into just gaming, we are going to be in trouble," he said. "And the river is one thing you don't have in Las Vegas."

One business leader, who asked not to be identified, termed the new hiking trail "Laughlin's bridge to nowhere," because of the footbridge that crosses Highway 163 on the northern edge of town.

Even if some of the initiatives gain traction and Laughlin's long slide starts to reverse, the resorts are braced for a long climb out.

"I am an optimist, but I also know that we have to manage our business to a number of external factors," Hammond said. "We can no longer just throw open the doors and wait for millions of people to walk in."

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.