Vegas bets too big on resorts

By Deena Beasley

LOS ANGELES (Reuters) - Las Vegas is unlikely to fill the thousands of luxury hotel rooms being built on the Strip given that its airport and roads are already bursting at the seams, Deutsche Bank analyst Bill Lerner said on Tuesday.

The problem will be "too much supply," he said at the Reuters Travel and Leisure Summit in Los Angeles.

Work is underway to add about 42,000 new rooms to the gambling corridor -- about one-third more than today.

To justify those rooms, nearly all of which are aimed at wealthy customers, revenue at resorts along the gambling corridor will need to rise by 75 percent between now and 2012, he said at the Reuters Travel and Leisure Summit in Los Angeles.

That will be "difficult to impossible" given constraints on transportation infrastructure, including McCarran Airport and the area's roads and highways, Lerner said.

Kevin Bagger, research director at the Las Vegas Convention and Visitors Authority said in a telephone interview that the agency's goal is to increase annual visitation by 10 percent by the end of the decade in order to keep Vegas hotel rooms about 85 percent occupied.

Lerner said McCarran Airport will likely be able to handle normal visitation growth for a couple of years, but plans for a new, more distant airport are still in the works and it would not come on line before 2017 at the earliest.

Meanwhile several new resorts, including Wynn Resort's Encore, MGM Mirage's CityCenter and Boyd Gaming's Echelon Place, are already under construction and more have been announced.  Continued...