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Hard luck befalls Las Vegas following U.S. housing bust

Hard luck befalls Las Vegas following U.S. housing bust

LAS VEGAS —Tavern operator Steve Arcana is a believer in trickle-down economics.

When tourism is strong and hotel rooms are full along this city’s glittering Strip, visitors tend to tip their dealers and cocktail waitresses generously. In turn, the dealers and servers then have more money for their own local hospitality spending, including visits to PT’s Gold or Sierra Gold, taverns owned by Las Vegas-based Golden Gaming Inc., where Arcana is chief operating officer. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Lately, however, that discretionary income isn’t trickling down like it used to, Arcana says. —Tavern operator Steve Arcana is a believer in trickle-down economics.

After several years of booming population growth, thriving tourism and almost giddy development, Las Vegas’ white-hot winning streak appears to be cooling under dark macroeconomic clouds. —Tavern operator Steve Arcana is a believer in trickle-down economics.

As in other hard-hit markets across the country, troubles here are blamed on the national credit crisis, inflation and high gas prices. Add to that declines in tourism and gaming, the key revenue generators in Las Vegas. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Still, the current recession hasn’t come close to matching the local tourism drain following the 9/11 terror attacks. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Reports from operators here are mixed. Some say business is better than expected. Others say slowed sales are simply a market correction following the heady success of the past few years. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Like gamblers around town, restaurateurs that are down say they expect their luck will change. They point to Las Vegas’ ability to repeatedly reinvent itself. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Believing that “if we build it, they will come,” many pin their economic hopes on high-profile developments under construction in the city, not the least of which is the $9 billion City Center project scheduled to open at the heart of the Strip next year. The 67-acre complex will include three hotels, a 4,000-room casino-resort, a residential tower and 500,000 square feet of retail and dining. —Tavern operator Steve Arcana is a believer in trickle-down economics.

City Center alone promises to employ about 14,000 people, which could improve the city’s unemployment rate, which was 6.8 percent in July, up from 5.1 percent at the same time last year. —Tavern operator Steve Arcana is a believer in trickle-down economics.

State labor officials blame the rise in unemployment on the national credit crisis hindering capital investment, which has delayed construction projects. In August, for example, Echelon Place, a $4.8 billion resort-and-retail complex under construction on the Strip, was put on hold for up to year due to lack of liquidity. —Tavern operator Steve Arcana is a believer in trickle-down economics.

The Cosmopolitan, a $3 billion, 3,000-room resort under construction, was believed to be doomed when reports in January had it falling into foreclosure. Earlier this month, however, an affiliate of lender Deutsche Bank bought the project for about $1 billion to revive the expected construction. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Of course, developers of hospitality venues are not the only victims of the credit crunch, which affects the consumers upon which such projects depend. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Nevada has led the nation in home foreclosures over the past 20 months, and the Las Vegas market in August had the seventh-highest rate of property repossessions among all metropolitan areas. One in every 75 homes in the city is in foreclosure, according to RealtyTrac, an online research database. —Tavern operator Steve Arcana is a believer in trickle-down economics.

For the year through June, the number of conventions coming to town was down 2.8 percent and convention-related hotel bookings had dropped 7.9 percent, according to the Las Vegas Convention and Visitors Authority. For all of Clark County, gaming revenue was down 5.1 percent in this year’s first half, versus year-earlier levels. Tourism has remained flat, however. Visitors still come to Las Vegas, officials say, but they don’t stay as long or spend as much. —Tavern operator Steve Arcana is a believer in trickle-down economics.

PT’s, a 24-hour tavern aimed at blue-collar locals, has seen its food and beverage sales fall 5 percent to 6 percent on a same-store basis this year, though higher gaming revenues have offset those losses somewhat. Golden Gaming is the state’s largest tavern operator, with 44 units. PT’s Gold is a mid-market brand, and high-end taverns like the company’s Sierra Gold, have fared better, Arcana said. —Tavern operator Steve Arcana is a believer in trickle-down economics.

To counteract declining sales, the company recently launched a new to-go program, with a “Bucket of Wings” for $16.99 as the centerpiece. On Wednesday nights, food and drink is 50 percent off, and various gaming promotions also aim to boost customer traffic. —Tavern operator Steve Arcana is a believer in trickle-down economics.

For Arcana, however, the economic downturn may open doors for new opportunities. Rather than build new units when construction costs are high, the company hopes to grow by acquisition. He declined to give details but indicated that one such deal is expected to close before the end of the year. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Like many Vegas operators, Arcana sees PT’s sales downturn as more of a correction than an indicator of troubled times. —Tavern operator Steve Arcana is a believer in trickle-down economics.

In agreement is Tom Kaplan, senior managing partner of the Wolfgang Puck Fine Dining Group, based in Las Vegas. Last year, for example, the city’s 15-year-old Spago location topped $15 million in sales, its best year ever. —Tavern operator Steve Arcana is a believer in trickle-down economics.

“Can we do close to $15 million every year? Probably not,” Kaplan said. “Last year was an exceptional year for everybody.” —Tavern operator Steve Arcana is a believer in trickle-down economics.

So far this year, the six Las Vegas locations of the Puck group are off about 4 percent over the same period last year, he said. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Kaplan is concerned that the economic picture will force local employers to cut back on holiday parties, which can be lucrative affairs in Las Vegas. To help avert a party downturn, Kaplan plans to cut catering rates by 25 percent and will throw in free gifts, such as Puck cookware, as incentives. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Still, the group is continuing to grow in Vegas, and Puck is one of the few restaurateurs to announce plans for City Center outposts. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Late next year the group plans to open a high-end concept dubbed Wolfgang Puck Brasserie. Near to where that Mediterranean-style restaurant would open, in a retail-and-dining area called The Crystals, a second, more casual Puck concept, currently using the working title The Pods, would offer small plates from the brasserie. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Two Los Angeles-based operators also intend to open in City Center. Katana, owned by Innovative Dining Group, and Mr. Chow’s, owned by Michael Chow, would be among the many other restaurants planned for the project but not yet identified. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Other projects in development also promise to bring more new restaurants to Las Vegas this year. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Stations Casinos, which caters to locals, is scheduled to open Aliante Station Casino-Hotel in November in North Las Vegas with six restaurants, including Pips Cucina & Wine Bar, developed by Rino Armeni; Camancho’s Cantina, a branch of the Mexican restaurant group based in Los Angeles; a T.G.I. Friday’s; The Original Pancake House; and the proprietary Station Casinos concept MRKT Sea & Land. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Also, the Wynn Las Vegas resort is adding the $2.2 billion Encore, set to open in December with a 2,000-suite hotel tower and five restaurants. Among them are the French steak-and-seafood concept Switch, the Asian bistro Wazuzu, a steakhouse called Botero, and an Italian eatery dubbed Theo’s. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Late last year, an upscale mall called Town Square opened near the Las Vegas airport, also geared to locals. The stylish outdoor venue features several restaurants and bars, including branches of South Carolina chef-restaurateur Louis Osteen’s upscale Louis’s and his more casual brand, The Fish Camp. —Tavern operator Steve Arcana is a believer in trickle-down economics.

In February, the 425-seat Brio Tuscan Grille, operated by Columbus, Ohio-based Bravo! Development Inc., opened as an anchor restaurant there. Kenna Warner, the restaurant’s managing partner, said sales during its opening weeks were more than double what was expected. —Tavern operator Steve Arcana is a believer in trickle-down economics.

Sales were slower through the summer, she said, but that is typical for Las Vegas, whose searing midyear heat can keep people from leaving their homes and hotels. —Tavern operator Steve Arcana is a believer in trickle-down economics.

To counteract the trend, Warner and her staff have been concentrating on “hand-to-hand, door-to-door” marketing efforts to keep the brand visible, including bringing food to high-school football tailgates and doctors’ offices. —Tavern operator Steve Arcana is a believer in trickle-down economics.

In another part of Town Square mall, a Yard House branch also opened earlier this year. Steele Platt, founder and chief executive of 20-unit Yard House, expects the new Las Vegas location’s sales to top $17 million this year, and he is already looking for a second local site, in suburban Summerlin. —Tavern operator Steve Arcana is a believer in trickle-down economics.

By comparison, a new Yard House in hard-hit Riverside, Calif., is expected to have about $7 million in sales this year. Systemwide, sales so far this year are up only 0.16 percent, Platt said, “but flat is the new high.” —Tavern operator Steve Arcana is a believer in trickle-down economics.

In Las Vegas, sales had softened slightly over the summer months, “but when you’re doing more than $300,000 a week in 10,000 square feet, what are you feeling?” he said. —Tavern operator Steve Arcana is a believer in trickle-down economics.

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